Correlation Between Payment Financial and Arad
Can any of the company-specific risk be diversified away by investing in both Payment Financial and Arad 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 Payment Financial and Arad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payment Financial Technologies and Arad, you can compare the effects of market volatilities on Payment Financial and Arad 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 Payment Financial with a short position of Arad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payment Financial and Arad.
Diversification Opportunities for Payment Financial and Arad
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Payment and Arad is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Payment Financial Technologies and Arad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arad and Payment Financial 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 Payment Financial Technologies are associated (or correlated) with Arad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arad has no effect on the direction of Payment Financial i.e., Payment Financial and Arad go up and down completely randomly.
Pair Corralation between Payment Financial and Arad
Assuming the 90 days trading horizon Payment Financial Technologies is expected to generate 3.18 times more return on investment than Arad. However, Payment Financial is 3.18 times more volatile than Arad. It trades about 0.34 of its potential returns per unit of risk. Arad is currently generating about 0.21 per unit of risk. If you would invest 33,670 in Payment Financial Technologies on October 20, 2024 and sell it today you would earn a total of 9,020 from holding Payment Financial Technologies or generate 26.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payment Financial Technologies vs. Arad
Performance |
| Timeline |
| Payment Financial |
| Arad |
Payment Financial and Arad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payment Financial and Arad
The main advantage of trading using opposite Payment Financial and Arad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payment Financial position performs unexpectedly, Arad 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 Arad will offset losses from the drop in Arad's long position.The idea behind Payment Financial Technologies and Arad pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Arad vs. Suny Cellular Communication | Arad vs. Payment Financial Technologies | Arad vs. Nrgene Technologies | Arad vs. Scope Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |