Correlation Between ARHT Media and ProStar Holdings

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

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

Diversification Opportunities for ARHT Media and ProStar Holdings

0.45

Correlation Coefficient

ARHT Media  ProStar Holdings

Very weak diversification

The 3 months correlation between ARHT and ProStar is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ARHT Media and ProStar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProStar Holdings and ARHT Media 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 ARHT Media are associated (or correlated) with ProStar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProStar Holdings has no effect on the direction of ARHT Media i.e., ARHT Media and ProStar Holdings go up and down completely randomly.

Pair Corralation between ARHT Media and ProStar Holdings

Assuming the 90 days horizon ARHT Media is expected to under-perform the ProStar Holdings. In addition to that, ARHT Media is 1.06 times more volatile than ProStar Holdings. It trades about -0.09 of its total potential returns per unit of risk. ProStar Holdings is currently generating about 0.0 per unit of volatility. If you would invest  11.00  in ProStar Holdings on September 1, 2024 and sell it today you would lose (3.00) from holding ProStar Holdings or give up 27.27% of portfolio value over 90 days.

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

ARHT Media  vs.  ProStar Holdings

ARHT Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARHT Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ProStar Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProStar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ARHT Media and ProStar Holdings

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

The idea behind ARHT Media and ProStar 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.