Correlation Between Sarine Technologies and Arad
Can any of the company-specific risk be diversified away by investing in both Sarine Technologies 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 Sarine Technologies and Arad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarine Technologies and Arad, you can compare the effects of market volatilities on Sarine Technologies 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 Sarine Technologies with a short position of Arad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarine Technologies and Arad.
Diversification Opportunities for Sarine Technologies and Arad
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sarine and Arad is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sarine Technologies and Arad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arad and Sarine Technologies 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 Sarine 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 Sarine Technologies i.e., Sarine Technologies and Arad go up and down completely randomly.
Pair Corralation between Sarine Technologies and Arad
Assuming the 90 days trading horizon Sarine Technologies is expected to under-perform the Arad. In addition to that, Sarine Technologies is 1.06 times more volatile than Arad. It trades about -0.12 of its total potential returns per unit of risk. Arad is currently generating about -0.1 per unit of volatility. If you would invest 514,500 in Arad on September 1, 2024 and sell it today you would lose (18,000) from holding Arad or give up 3.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sarine Technologies vs. Arad
Performance |
| Timeline |
| Sarine Technologies |
| Arad |
Sarine Technologies and Arad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarine Technologies and Arad
The main advantage of trading using opposite Sarine Technologies and Arad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarine Technologies 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.| Sarine Technologies vs. Migdal Insurance | Sarine Technologies vs. Computer Direct | Sarine Technologies vs. Retailors | Sarine Technologies vs. Magic Software Enterprises |
| Arad vs. Amanet Management Systems | Arad vs. Dan Hotels | Arad vs. Scope Metals Group | Arad vs. Sofwave Medical |
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 CEOs Directory module to screen CEOs from public companies around the world.
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