Correlation Between Autosports and ARN Media
Can any of the company-specific risk be diversified away by investing in both Autosports and ARN Media 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 Autosports and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autosports Group and ARN Media Limited, you can compare the effects of market volatilities on Autosports and ARN Media 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 Autosports with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and ARN Media.
Diversification Opportunities for Autosports and ARN Media
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Autosports and ARN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Autosports 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 Autosports Group are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Autosports i.e., Autosports and ARN Media go up and down completely randomly.
Pair Corralation between Autosports and ARN Media
Assuming the 90 days trading horizon Autosports Group is expected to generate 0.56 times more return on investment than ARN Media. However, Autosports Group is 1.78 times less risky than ARN Media. It trades about -0.15 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.21 per unit of risk. If you would invest 174.00 in Autosports Group on November 4, 2024 and sell it today you would lose (6.00) from holding Autosports Group or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autosports Group vs. ARN Media Limited
Performance |
| Timeline |
| Autosports Group |
| ARN Media Limited |
Autosports and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autosports and ARN Media
The main advantage of trading using opposite Autosports and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Autosports vs. Centrex Metals | Autosports vs. FireFly Metals | Autosports vs. Cosmo Metals | Autosports vs. Champion Iron |
| ARN Media vs. Sky Metals | ARN Media vs. Aeon Metals | ARN Media vs. Black Rock Mining | ARN Media vs. Hudson Investment Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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