Correlation Between ARB IOT and BigBearai Holdings

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

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

Diversification Opportunities for ARB IOT and BigBearai Holdings

-0.46

Correlation Coefficient

ARB IOT  BigBearai Holdings

Very good diversification

The 3 months correlation between ARB and BigBearai is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding ARB IOT Group and BigBearai Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BigBearai Holdings and ARB IOT 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 ARB IOT Group are associated (or correlated) with BigBearai Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BigBearai Holdings has no effect on the direction of ARB IOT i.e., ARB IOT and BigBearai Holdings go up and down completely randomly.

Pair Corralation between ARB IOT and BigBearai Holdings

Given the investment horizon of 90 days ARB IOT Group is expected to generate 1.13 times more return on investment than BigBearai Holdings. However, ARB IOT is 1.13 times more volatile than BigBearai Holdings. It trades about 0.12 of its potential returns per unit of risk. BigBearai Holdings is currently generating about -0.02 per unit of risk. If you would invest  45.00  in ARB IOT Group on December 29, 2024 and sell it today you would earn a total of  32.00  from holding ARB IOT Group or generate 71.11% return on investment over 90 days.

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

ARB IOT Group  vs.  BigBearai Holdings

ARB IOT Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ARB IOT Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, ARB IOT sustained solid returns over the last few months and may actually be approaching a breakup point.

BigBearai Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days BigBearai Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with ARB IOT and BigBearai Holdings

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

The idea behind ARB IOT Group and BigBearai Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.