Correlation Between Arm Holdings and BAIYU Holdings

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

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

Diversification Opportunities for Arm Holdings and BAIYU Holdings

0.48

Correlation Coefficient

Arm Holdings  BAIYU Holdings

Very weak diversification

The 3 months correlation between Arm and BAIYU is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings and Arm 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 Arm Holdings plc are associated (or correlated) with BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of Arm Holdings i.e., Arm Holdings and BAIYU Holdings go up and down completely randomly.

Pair Corralation between Arm Holdings and BAIYU Holdings

Considering the 90-day investment horizon Arm Holdings plc is expected to generate 0.59 times more return on investment than BAIYU Holdings. However, Arm Holdings plc is 1.7 times less risky than BAIYU Holdings. It trades about 0.09 of its potential returns per unit of risk. BAIYU Holdings is currently generating about -0.04 per unit of risk. If you would invest  5,423  in Arm Holdings plc on October 11, 2024 and sell it today you would earn a total of  9,097  from holding Arm Holdings plc or generate 167.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.89%
Values	Daily Returns

Arm Holdings plc  vs.  BAIYU Holdings

Arm Holdings plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arm Holdings plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Arm Holdings is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

BAIYU Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Arm Holdings and BAIYU Holdings

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

The idea behind Arm Holdings plc and BAIYU 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 CEOs Directory module to screen CEOs from public companies around the world.