Correlation Between Arbe Robotics and Evertec

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

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

Diversification Opportunities for Arbe Robotics and Evertec

-0.52

Correlation Coefficient

Arbe Robotics  Evertec

Excellent diversification

The 3 months correlation between Arbe and Evertec is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Arbe Robotics and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec and Arbe Robotics 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 Arbe Robotics are associated (or correlated) with Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of Arbe Robotics i.e., Arbe Robotics and Evertec go up and down completely randomly.

Pair Corralation between Arbe Robotics and Evertec

Given the investment horizon of 90 days Arbe Robotics is expected to generate 2.68 times more return on investment than Evertec. However, Arbe Robotics is 2.68 times more volatile than Evertec. It trades about 0.01 of its potential returns per unit of risk. Evertec is currently generating about 0.02 per unit of risk. If you would invest  173.00  in Arbe Robotics on September 13, 2024 and sell it today you would lose (1.00) from holding Arbe Robotics or give up 0.58% of portfolio value over 90 days.

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

Arbe Robotics  vs.  Evertec

Arbe Robotics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbe Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Evertec

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Evertec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Arbe Robotics and Evertec

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

The idea behind Arbe Robotics and Evertec 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.