Correlation Between Arbor Technology and Green World

Can any of the company-specific risk be diversified away by investing in both Arbor Technology and Green World 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 Arbor Technology and Green World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arbor Technology and Green World Fintech, you can compare the effects of market volatilities on Arbor Technology and Green World 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 Arbor Technology with a short position of Green World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Technology and Green World.

Diversification Opportunities for Arbor Technology and Green World

0.75

Correlation Coefficient

Arbor Technology  Green World

Poor diversification

The 3 months correlation between Arbor and Green is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Technology and Green World Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green World Fintech and Arbor Technology 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 Arbor Technology are associated (or correlated) with Green World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green World Fintech has no effect on the direction of Arbor Technology i.e., Arbor Technology and Green World go up and down completely randomly.

Pair Corralation between Arbor Technology and Green World

Assuming the 90 days trading horizon Arbor Technology is expected to generate 1.1 times more return on investment than Green World. However, Arbor Technology is 1.1 times more volatile than Green World Fintech. It trades about 0.0 of its potential returns per unit of risk. Green World Fintech is currently generating about 0.0 per unit of risk. If you would invest  5,090  in Arbor Technology on December 30, 2024 and sell it today you would lose (90.00) from holding Arbor Technology or give up 1.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Arbor Technology  vs.  Green World Fintech

Arbor Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arbor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Arbor Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Green World Fintech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Green World Fintech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Green World is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Arbor Technology and Green World

The main advantage of trading using opposite Arbor Technology and Green World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Technology position performs unexpectedly, Green World 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 Green World will offset losses from the drop in Green World's long position.

The idea behind Arbor Technology and Green World Fintech 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.