Correlation Between Arm Holdings and Eastman Kodak

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

Diversification Opportunities for Arm Holdings and Eastman Kodak

0.67

Correlation Coefficient

Arm Holdings  Eastman Kodak

Poor diversification

The 3 months correlation between Arm and Eastman is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak 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 Eastman Kodak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Kodak has no effect on the direction of Arm Holdings i.e., Arm Holdings and Eastman Kodak go up and down completely randomly.

Pair Corralation between Arm Holdings and Eastman Kodak

Considering the 90-day investment horizon Arm Holdings plc is expected to under-perform the Eastman Kodak. In addition to that, Arm Holdings is 1.37 times more volatile than Eastman Kodak Co. It trades about -0.02 of its total potential returns per unit of risk. Eastman Kodak Co is currently generating about -0.03 per unit of volatility. If you would invest  701.00  in Eastman Kodak Co on December 27, 2024 and sell it today you would lose (58.00) from holding Eastman Kodak Co or give up 8.27% of portfolio value over 90 days.

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

Arm Holdings plc  vs.  Eastman Kodak Co

Arm Holdings plc

Risk-Adjusted Performance

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 recent stock price disarray, may contribute to short-term losses for the investors.

Eastman Kodak

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastman Kodak Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Eastman Kodak is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Arm Holdings and Eastman Kodak

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

The idea behind Arm Holdings plc and Eastman Kodak Co 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..