Correlation Between AppTech Payments and Arax Holdings

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

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

Diversification Opportunities for AppTech Payments and Arax Holdings

0.53

Correlation Coefficient

AppTech Payments  Arax Holdings

Very weak diversification

The 3 months correlation between AppTech and Arax is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AppTech Payments Corp and Arax Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arax Holdings Corp and AppTech Payments 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 AppTech Payments Corp are associated (or correlated) with Arax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arax Holdings Corp has no effect on the direction of AppTech Payments i.e., AppTech Payments and Arax Holdings go up and down completely randomly.

Pair Corralation between AppTech Payments and Arax Holdings

Assuming the 90 days horizon AppTech Payments Corp is expected to under-perform the Arax Holdings. In addition to that, AppTech Payments is 21.49 times more volatile than Arax Holdings Corp. It trades about -0.22 of its total potential returns per unit of risk. Arax Holdings Corp is currently generating about -0.32 per unit of volatility. If you would invest  55.00  in Arax Holdings Corp on September 12, 2024 and sell it today you would lose (2.00) from holding Arax Holdings Corp or give up 3.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	71.43%
Values	Daily Returns

AppTech Payments Corp  vs.  Arax Holdings Corp

AppTech Payments Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AppTech Payments Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AppTech Payments showed solid returns over the last few months and may actually be approaching a breakup point.

Arax Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arax Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Arax Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AppTech Payments and Arax Holdings

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

The idea behind AppTech Payments Corp and Arax Holdings Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.