Correlation Between Aran Research and Amanet Management

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

By analyzing existing cross correlation between Aran Research and and Amanet Management Systems, you can compare the effects of market volatilities on Aran Research and Amanet Management 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 Aran Research with a short position of Amanet Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aran Research and Amanet Management.

Diversification Opportunities for Aran Research and Amanet Management

-0.53

Correlation Coefficient

Aran Research  Amanet Management

Excellent diversification

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

Pair Corralation between Aran Research and Amanet Management

Assuming the 90 days trading horizon Aran Research and is expected to under-perform the Amanet Management. But the stock apears to be less risky and, when comparing its historical volatility, Aran Research and is 1.01 times less risky than Amanet Management. The stock trades about -0.03 of its potential returns per unit of risk. The Amanet Management Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  162,600  in Amanet Management Systems on December 29, 2024 and sell it today you would earn a total of  15,400  from holding Amanet Management Systems or generate 9.47% return on investment over 90 days.

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

Aran Research and  vs.  Amanet Management Systems

Aran Research

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aran Research and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aran Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amanet Management Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amanet Management Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amanet Management sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aran Research and Amanet Management

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

The idea behind Aran Research and and Amanet Management Systems 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.