Correlation Between ARRWW Old and ABRI SPAC

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

By analyzing existing cross correlation between ARRWW Old and ABRI SPAC I, you can compare the effects of market volatilities on ARRWW Old and ABRI SPAC 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 ARRWW Old with a short position of ABRI SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARRWW Old and ABRI SPAC.

Diversification Opportunities for ARRWW Old and ABRI SPAC

0.0

Correlation Coefficient

ARRWW Old  ABRI SPAC

Pay attention - limited upside

The 3 months correlation between ARRWW and ABRI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ARRWW Old and ABRI SPAC I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABRI SPAC I and ARRWW Old 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 ARRWW Old are associated (or correlated) with ABRI SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABRI SPAC I has no effect on the direction of ARRWW Old i.e., ARRWW Old and ABRI SPAC go up and down completely randomly.

Pair Corralation between ARRWW Old and ABRI SPAC

Assuming the 90 days horizon ARRWW Old is expected to generate 1.24 times less return on investment than ABRI SPAC. But when comparing it to its historical volatility, ARRWW Old is 1.8 times less risky than ABRI SPAC. It trades about 0.13 of its potential returns per unit of risk. ABRI SPAC I is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6.52  in ABRI SPAC I on October 26, 2024 and sell it today you would lose (3.51) from holding ABRI SPAC I or give up 53.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	68.97%
Values	Daily Returns

ARRWW Old  vs.  ABRI SPAC I

ARRWW Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARRWW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ARRWW Old is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ABRI SPAC I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABRI SPAC I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ABRI SPAC is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ARRWW Old and ABRI SPAC

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

The idea behind ARRWW Old and ABRI SPAC I 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.