Correlation Between ARN Media and Peel Mining
Can any of the company-specific risk be diversified away by investing in both ARN Media and Peel Mining 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 ARN Media and Peel Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARN Media Limited and Peel Mining, you can compare the effects of market volatilities on ARN Media and Peel Mining 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 ARN Media with a short position of Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARN Media and Peel Mining.
Diversification Opportunities for ARN Media and Peel Mining
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ARN and Peel is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Peel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining and ARN Media 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 ARN Media Limited are associated (or correlated) with Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining has no effect on the direction of ARN Media i.e., ARN Media and Peel Mining go up and down completely randomly.
Pair Corralation between ARN Media and Peel Mining
Assuming the 90 days trading horizon ARN Media Limited is expected to generate 0.72 times more return on investment than Peel Mining. However, ARN Media Limited is 1.39 times less risky than Peel Mining. It trades about 0.09 of its potential returns per unit of risk. Peel Mining is currently generating about 0.02 per unit of risk. If you would invest 69.00 in ARN Media Limited on September 20, 2024 and sell it today you would earn a total of 3.00 from holding ARN Media Limited or generate 4.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ARN Media Limited vs. Peel Mining
Performance |
Timeline |
ARN Media Limited |
Peel Mining |
ARN Media and Peel Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ARN Media and Peel Mining
The main advantage of trading using opposite ARN Media and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARN Media position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.ARN Media vs. Audio Pixels Holdings | ARN Media vs. Norwest Minerals | ARN Media vs. Lindian Resources | ARN Media vs. Chilwa Minerals Limited |
Peel Mining vs. Northern Star Resources | Peel Mining vs. Evolution Mining | Peel Mining vs. Bluescope Steel | Peel Mining vs. Sandfire Resources NL |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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