Correlation Between Arm Holdings and Electrovaya Common

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

Diversification Opportunities for Arm Holdings and Electrovaya Common

-0.15

Correlation Coefficient

Arm Holdings  Electrovaya Common

Good diversification

The 3 months correlation between Arm and Electrovaya is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares 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 Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Arm Holdings i.e., Arm Holdings and Electrovaya Common go up and down completely randomly.

Pair Corralation between Arm Holdings and Electrovaya Common

Considering the 90-day investment horizon Arm Holdings is expected to generate 20.22 times less return on investment than Electrovaya Common. But when comparing it to its historical volatility, Arm Holdings plc is 1.35 times less risky than Electrovaya Common. It trades about 0.01 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  212.00  in Electrovaya Common Shares on October 22, 2024 and sell it today you would earn a total of  38.00  from holding Electrovaya Common Shares or generate 17.92% return on investment over 90 days.

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

Arm Holdings plc  vs.  Electrovaya Common Shares

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.

Electrovaya Common Shares

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arm Holdings and Electrovaya Common

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

The idea behind Arm Holdings plc and Electrovaya Common Shares 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.