Correlation Between Provision Information and Arbor Technology

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

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

Diversification Opportunities for Provision Information and Arbor Technology

0.5

Correlation Coefficient

Provision Information  Arbor Technology

Very weak diversification

The 3 months correlation between Provision and Arbor is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Provision Information CoLtd and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Technology and Provision Information 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 Provision Information CoLtd are associated (or correlated) with Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of Provision Information i.e., Provision Information and Arbor Technology go up and down completely randomly.

Pair Corralation between Provision Information and Arbor Technology

Assuming the 90 days trading horizon Provision Information CoLtd is expected to under-perform the Arbor Technology. But the stock apears to be less risky and, when comparing its historical volatility, Provision Information CoLtd is 1.6 times less risky than Arbor Technology. The stock trades about 0.0 of its potential returns per unit of risk. The Arbor Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,820  in Arbor Technology on September 26, 2024 and sell it today you would earn a total of  210.00  from holding Arbor Technology or generate 4.36% return on investment over 90 days.

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

Provision Information CoLtd  vs.  Arbor Technology

Provision Information

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Provision Information CoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Provision Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Arbor Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Provision Information and Arbor Technology

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

The idea behind Provision Information CoLtd and Arbor Technology 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.