Correlation Between Arad Investment and Trucknet Enterprise

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

By analyzing existing cross correlation between Arad Investment Industrial and Trucknet Enterprise, you can compare the effects of market volatilities on Arad Investment and Trucknet Enterprise 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 Arad Investment with a short position of Trucknet Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Trucknet Enterprise.

Diversification Opportunities for Arad Investment and Trucknet Enterprise

0.34

Correlation Coefficient

Arad Investment  Trucknet Enterprise

Weak diversification

The 3 months correlation between Arad and Trucknet is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Trucknet Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trucknet Enterprise and Arad Investment 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 Arad Investment Industrial are associated (or correlated) with Trucknet Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trucknet Enterprise has no effect on the direction of Arad Investment i.e., Arad Investment and Trucknet Enterprise go up and down completely randomly.

Pair Corralation between Arad Investment and Trucknet Enterprise

Assuming the 90 days trading horizon Arad Investment Industrial is expected to under-perform the Trucknet Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, Arad Investment Industrial is 1.66 times less risky than Trucknet Enterprise. The stock trades about -0.18 of its potential returns per unit of risk. The Trucknet Enterprise is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  10,970  in Trucknet Enterprise on December 30, 2024 and sell it today you would lose (1,630) from holding Trucknet Enterprise or give up 14.86% of portfolio value over 90 days.

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

Arad Investment Industrial  vs.  Trucknet Enterprise

Arad Investment Indu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arad Investment Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat 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 company investors.

Trucknet Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trucknet Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Arad Investment and Trucknet Enterprise

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

The idea behind Arad Investment Industrial and Trucknet Enterprise 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.