Correlation Between Arax Holdings and Via Renewables

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

Diversification Opportunities for Arax Holdings and Via Renewables

-0.37

Correlation Coefficient

Arax Holdings  Via Renewables

Very good diversification

The 3 months correlation between Arax and Via is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Arax Holdings Corp and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables 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 Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Arax Holdings i.e., Arax Holdings and Via Renewables go up and down completely randomly.

Pair Corralation between Arax Holdings and Via Renewables

Given the investment horizon of 90 days Arax Holdings Corp is expected to generate 8.35 times more return on investment than Via Renewables. However, Arax Holdings is 8.35 times more volatile than Via Renewables. It trades about 0.03 of its potential returns per unit of risk. Via Renewables is currently generating about 0.07 per unit of risk. If you would invest  115.00  in Arax Holdings Corp on December 3, 2024 and sell it today you would lose (111.30) from holding Arax Holdings Corp or give up 96.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Arax Holdings Corp  vs.  Via Renewables

Arax Holdings Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arax Holdings Corp are ranked lower than 2 (%) 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.

Via Renewables

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Arax Holdings and Via Renewables

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

The idea behind Arax Holdings Corp and Via Renewables 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..