Correlation Between Credit Corp and Aruma Resources
Can any of the company-specific risk be diversified away by investing in both Credit Corp and Aruma Resources 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 Credit Corp and Aruma Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Corp Group and Aruma Resources, you can compare the effects of market volatilities on Credit Corp and Aruma Resources 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 Credit Corp with a short position of Aruma Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Corp and Aruma Resources.
Diversification Opportunities for Credit Corp and Aruma Resources
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Credit and Aruma is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Credit Corp Group and Aruma Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aruma Resources and Credit Corp 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 Credit Corp Group are associated (or correlated) with Aruma Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aruma Resources has no effect on the direction of Credit Corp i.e., Credit Corp and Aruma Resources go up and down completely randomly.
Pair Corralation between Credit Corp and Aruma Resources
Assuming the 90 days trading horizon Credit Corp is expected to generate 1.91 times less return on investment than Aruma Resources. But when comparing it to its historical volatility, Credit Corp Group is 4.15 times less risky than Aruma Resources. It trades about 0.07 of its potential returns per unit of risk. Aruma Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.70 in Aruma Resources on August 29, 2024 and sell it today you would lose (0.20) from holding Aruma Resources or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Credit Corp Group vs. Aruma Resources
Performance |
| Timeline |
| Credit Corp Group |
| Aruma Resources |
Credit Corp and Aruma Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Corp and Aruma Resources
The main advantage of trading using opposite Credit Corp and Aruma Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Corp position performs unexpectedly, Aruma Resources 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 Aruma Resources will offset losses from the drop in Aruma Resources' long position.| Credit Corp vs. ARN Media Limited | Credit Corp vs. Kneomedia | Credit Corp vs. AiMedia Technologies | Credit Corp vs. Hotel Property Investments |
| Aruma Resources vs. Genetic Technologies | Aruma Resources vs. Saferoads Holdings | Aruma Resources vs. Richmond Vanadium Technology | Aruma Resources vs. G8 Education |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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