Correlation Between Arctic Blue and White Pearl
Can any of the company-specific risk be diversified away by investing in both Arctic Blue and White Pearl at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Arctic Blue and White Pearl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Blue Beverages and White Pearl Technology, you can compare the effects of market volatilities on Arctic Blue and White Pearl and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Arctic Blue with a short position of White Pearl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Blue and White Pearl.
Diversification Opportunities for Arctic Blue and White Pearl
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arctic and White is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Blue Beverages and White Pearl Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Pearl Technology and Arctic Blue is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Arctic Blue Beverages are associated (or correlated) with White Pearl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Pearl Technology has no effect on the direction of Arctic Blue i.e., Arctic Blue and White Pearl go up and down completely randomly.
Pair Corralation between Arctic Blue and White Pearl
Assuming the 90 days trading horizon Arctic Blue Beverages is expected to under-perform the White Pearl. But the stock apears to be less risky and, when comparing its historical volatility, Arctic Blue Beverages is 1.8 times less risky than White Pearl. The stock trades about -0.33 of its potential returns per unit of risk. The White Pearl Technology is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 383.00 in White Pearl Technology on September 3, 2024 and sell it today you would earn a total of 213.00 from holding White Pearl Technology or generate 55.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arctic Blue Beverages vs. White Pearl Technology
Performance |
| Timeline |
| Arctic Blue Beverages |
| White Pearl Technology |
Arctic Blue and White Pearl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arctic Blue and White Pearl
The main advantage of trading using opposite Arctic Blue and White Pearl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Blue position performs unexpectedly, White Pearl can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in White Pearl will offset losses from the drop in White Pearl's long position.| Arctic Blue vs. Cint Group AB | Arctic Blue vs. Nordic Waterproofing Holding | Arctic Blue vs. Synsam AB | Arctic Blue vs. Inwido AB |
| White Pearl vs. AstraZeneca PLC | White Pearl vs. Investor AB ser | White Pearl vs. Investor AB ser | White Pearl vs. Atlas Copco AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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