Correlation Between Arbor Metals and CHAR Technologies

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

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

Diversification Opportunities for Arbor Metals and CHAR Technologies

0.69

Correlation Coefficient

Arbor Metals  CHAR Technologies

Poor diversification

The 3 months correlation between Arbor and CHAR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies and Arbor Metals 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 Metals Corp are associated (or correlated) with CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Arbor Metals i.e., Arbor Metals and CHAR Technologies go up and down completely randomly.

Pair Corralation between Arbor Metals and CHAR Technologies

Assuming the 90 days horizon Arbor Metals Corp is expected to under-perform the CHAR Technologies. In addition to that, Arbor Metals is 1.15 times more volatile than CHAR Technologies. It trades about -0.1 of its total potential returns per unit of risk. CHAR Technologies is currently generating about -0.06 per unit of volatility. If you would invest  48.00  in CHAR Technologies on September 28, 2024 and sell it today you would lose (31.00) from holding CHAR Technologies or give up 64.58% of portfolio value over 90 days.

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

Arbor Metals Corp  vs.  CHAR Technologies

Arbor Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbor Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

CHAR Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Arbor Metals and CHAR Technologies

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

The idea behind Arbor Metals Corp and CHAR Technologies 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.