Correlation Between Sandon Capital and ARN Media
Can any of the company-specific risk be diversified away by investing in both Sandon Capital 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 Sandon Capital and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandon Capital Investments and ARN Media Limited, you can compare the effects of market volatilities on Sandon Capital 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 Sandon Capital with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandon Capital and ARN Media.
Diversification Opportunities for Sandon Capital and ARN Media
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sandon and ARN is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sandon Capital Investments 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 Sandon Capital 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 Sandon Capital Investments 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 Sandon Capital i.e., Sandon Capital and ARN Media go up and down completely randomly.
Pair Corralation between Sandon Capital and ARN Media
Assuming the 90 days trading horizon Sandon Capital Investments is expected to generate 0.55 times more return on investment than ARN Media. However, Sandon Capital Investments is 1.83 times less risky than ARN Media. It trades about 0.13 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.15 per unit of risk. If you would invest 79.00 in Sandon Capital Investments on November 7, 2024 and sell it today you would earn a total of 2.00 from holding Sandon Capital Investments or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sandon Capital Investments vs. ARN Media Limited
Performance |
| Timeline |
| Sandon Capital Inves |
| ARN Media Limited |
Sandon Capital and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandon Capital and ARN Media
The main advantage of trading using opposite Sandon Capital and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandon Capital 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.| Sandon Capital vs. Aurelia Metals | Sandon Capital vs. Sky Metals | Sandon Capital vs. Rare Foods Australia | Sandon Capital vs. Land Homes Group |
| ARN Media vs. Hotel Property Investments | ARN Media vs. Microequities Asset Management | ARN Media vs. Steamships Trading | 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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