Correlation Between Archer Focus and Archer Multi

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

By analyzing existing cross correlation between Archer Focus and Archer Multi Cap, you can compare the effects of market volatilities on Archer Focus and Archer Multi 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 Archer Focus with a short position of Archer Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Focus and Archer Multi.

Diversification Opportunities for Archer Focus and Archer Multi

0.83

Correlation Coefficient

Archer Focus  Archer Multi

Very poor diversification

The 3 months correlation between Archer and Archer is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Archer Focus and Archer Multi Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Multi Cap and Archer Focus 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 Archer Focus are associated (or correlated) with Archer Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Multi Cap has no effect on the direction of Archer Focus i.e., Archer Focus and Archer Multi go up and down completely randomly.

Pair Corralation between Archer Focus and Archer Multi

Assuming the 90 days horizon Archer Focus is expected to under-perform the Archer Multi. In addition to that, Archer Focus is 1.24 times more volatile than Archer Multi Cap. It trades about -0.15 of its total potential returns per unit of risk. Archer Multi Cap is currently generating about -0.17 per unit of volatility. If you would invest  1,505  in Archer Multi Cap on December 20, 2024 and sell it today you would lose (169.00) from holding Archer Multi Cap or give up 11.23% of portfolio value over 90 days.

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

Archer Focus  vs.  Archer Multi Cap

Archer Focus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archer Focus has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Archer Multi Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archer Multi Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Archer Focus and Archer Multi

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

The idea behind Archer Focus and Archer Multi Cap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.