Correlation Between Arq and Borealis Foods

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

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

Diversification Opportunities for Arq and Borealis Foods

-0.66

Correlation Coefficient

Arq  Borealis Foods

Excellent diversification

The 3 months correlation between Arq and Borealis is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Arq Inc and Borealis Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borealis Foods and Arq 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 Arq Inc are associated (or correlated) with Borealis Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borealis Foods has no effect on the direction of Arq i.e., Arq and Borealis Foods go up and down completely randomly.

Pair Corralation between Arq and Borealis Foods

Considering the 90-day investment horizon Arq Inc is expected to under-perform the Borealis Foods. But the stock apears to be less risky and, when comparing its historical volatility, Arq Inc is 1.96 times less risky than Borealis Foods. The stock trades about -0.16 of its potential returns per unit of risk. The Borealis Foods is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7.58  in Borealis Foods on December 20, 2024 and sell it today you would earn a total of  2.42  from holding Borealis Foods or generate 31.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.0%
Values	Daily Returns

Arq Inc  vs.  Borealis Foods

Arq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Borealis Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Borealis Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Borealis Foods showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arq and Borealis Foods

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

The idea behind Arq Inc and Borealis Foods 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.