Correlation Between Arax Holdings and RocketFuel Blockchain

Can any of the company-specific risk be diversified away by investing in both Arax Holdings and RocketFuel Blockchain 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 RocketFuel Blockchain 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 RocketFuel Blockchain, you can compare the effects of market volatilities on Arax Holdings and RocketFuel Blockchain 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 RocketFuel Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arax Holdings and RocketFuel Blockchain.

Diversification Opportunities for Arax Holdings and RocketFuel Blockchain

0.0

Correlation Coefficient

Arax Holdings  RocketFuel Blockchain

Pay attention - limited upside

The 3 months correlation between Arax and RocketFuel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arax Holdings Corp and RocketFuel Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RocketFuel Blockchain 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 RocketFuel Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RocketFuel Blockchain has no effect on the direction of Arax Holdings i.e., Arax Holdings and RocketFuel Blockchain go up and down completely randomly.

Pair Corralation between Arax Holdings and RocketFuel Blockchain

Given the investment horizon of 90 days Arax Holdings is expected to generate 5.23 times less return on investment than RocketFuel Blockchain. But when comparing it to its historical volatility, Arax Holdings Corp is 3.3 times less risky than RocketFuel Blockchain. It trades about 0.07 of its potential returns per unit of risk. RocketFuel Blockchain is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  14.00  in RocketFuel Blockchain on October 11, 2024 and sell it today you would lose (12.00) from holding RocketFuel Blockchain or give up 85.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	56.85%
Values	Daily Returns

Arax Holdings Corp  vs.  RocketFuel Blockchain

Arax Holdings Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arax Holdings Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Arax Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

RocketFuel Blockchain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RocketFuel Blockchain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, RocketFuel Blockchain is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Arax Holdings and RocketFuel Blockchain

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

The idea behind Arax Holdings Corp and RocketFuel Blockchain 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.