Correlation Between Arm Holdings and SEALSQ Corp

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

Diversification Opportunities for Arm Holdings and SEALSQ Corp

-0.43

Correlation Coefficient

Arm Holdings  SEALSQ Corp

Very good diversification

The 3 months correlation between Arm and SEALSQ is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and SEALSQ Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALSQ Corp 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 SEALSQ Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALSQ Corp has no effect on the direction of Arm Holdings i.e., Arm Holdings and SEALSQ Corp go up and down completely randomly.

Pair Corralation between Arm Holdings and SEALSQ Corp

Considering the 90-day investment horizon Arm Holdings is expected to generate 10.82 times less return on investment than SEALSQ Corp. But when comparing it to its historical volatility, Arm Holdings plc is 3.43 times less risky than SEALSQ Corp. It trades about 0.04 of its potential returns per unit of risk. SEALSQ Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  123.00  in SEALSQ Corp on October 9, 2024 and sell it today you would earn a total of  592.00  from holding SEALSQ Corp or generate 481.3% return on investment over 90 days.

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

Arm Holdings plc  vs.  SEALSQ Corp

Arm Holdings plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arm Holdings plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

SEALSQ Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEALSQ Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SEALSQ Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arm Holdings and SEALSQ Corp

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

The idea behind Arm Holdings plc and SEALSQ Corp 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 Stocks Directory module to find actively traded stocks across global markets.