Correlation Between Arax Holdings and Fobi AI

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

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

Diversification Opportunities for Arax Holdings and Fobi AI

0.77

Correlation Coefficient

Arax Holdings  Fobi AI

Poor diversification

The 3 months correlation between Arax and Fobi is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Arax Holdings Corp and Fobi AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fobi AI and Arax Holdings 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 Arax Holdings Corp are associated (or correlated) with Fobi AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fobi AI has no effect on the direction of Arax Holdings i.e., Arax Holdings and Fobi AI go up and down completely randomly.

Pair Corralation between Arax Holdings and Fobi AI

Given the investment horizon of 90 days Arax Holdings Corp is expected to generate 0.68 times more return on investment than Fobi AI. However, Arax Holdings Corp is 1.48 times less risky than Fobi AI. It trades about -0.03 of its potential returns per unit of risk. Fobi AI is currently generating about -0.06 per unit of risk. If you would invest  84.00  in Arax Holdings Corp on September 4, 2024 and sell it today you would lose (30.00) from holding Arax Holdings Corp or give up 35.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Arax Holdings Corp  vs.  Fobi AI

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fobi AI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fobi AI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Arax Holdings and Fobi AI

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

The idea behind Arax Holdings Corp and Fobi AI 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.