Correlation Between ARB IOT and Nayax

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

Diversification Opportunities for ARB IOT and Nayax

-0.1

Correlation Coefficient

ARB IOT  Nayax

Good diversification

The 3 months correlation between ARB and Nayax is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ARB IOT Group and Nayax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nayax 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 Nayax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nayax has no effect on the direction of ARB IOT i.e., ARB IOT and Nayax go up and down completely randomly.

Pair Corralation between ARB IOT and Nayax

Given the investment horizon of 90 days ARB IOT is expected to generate 7.1 times less return on investment than Nayax. In addition to that, ARB IOT is 3.49 times more volatile than Nayax. It trades about 0.0 of its total potential returns per unit of risk. Nayax is currently generating about 0.07 per unit of volatility. If you would invest  1,840  in Nayax on November 19, 2024 and sell it today you would earn a total of  2,114  from holding Nayax or generate 114.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.26%
Values	Daily Returns

ARB IOT Group  vs.  Nayax

ARB IOT Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ARB IOT Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, ARB IOT may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Nayax

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nayax are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Nayax showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARB IOT and Nayax

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

The idea behind ARB IOT Group and Nayax 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.