Correlation Between Aramark Holdings and NuGene International

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

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

Diversification Opportunities for Aramark Holdings and NuGene International

-0.21

Correlation Coefficient

Aramark Holdings  NuGene International

Very good diversification

The 3 months correlation between Aramark and NuGene is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aramark Holdings and NuGene International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuGene International and Aramark 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 Aramark Holdings are associated (or correlated) with NuGene International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuGene International has no effect on the direction of Aramark Holdings i.e., Aramark Holdings and NuGene International go up and down completely randomly.

Pair Corralation between Aramark Holdings and NuGene International

Given the investment horizon of 90 days Aramark Holdings is expected to under-perform the NuGene International. But the stock apears to be less risky and, when comparing its historical volatility, Aramark Holdings is 11.02 times less risky than NuGene International. The stock trades about -0.06 of its potential returns per unit of risk. The NuGene International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.60  in NuGene International on October 11, 2024 and sell it today you would lose (0.10) from holding NuGene International or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Aramark Holdings  vs.  NuGene International

Aramark Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

NuGene International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NuGene International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, NuGene International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aramark Holdings and NuGene International

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

The idea behind Aramark Holdings and NuGene International 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.