Correlation Between Archer Stock and Archer Multi

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

By analyzing existing cross correlation between Archer Stock Fund and Archer Multi Cap, you can compare the effects of market volatilities on Archer Stock and Archer Multi 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 Archer Stock with a short position of Archer Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Stock and Archer Multi.

Diversification Opportunities for Archer Stock and Archer Multi

0.66

Correlation Coefficient

Archer Stock  Archer Multi

Poor diversification

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

Pair Corralation between Archer Stock and Archer Multi

Assuming the 90 days horizon Archer Stock Fund is expected to under-perform the Archer Multi. In addition to that, Archer Stock is 1.17 times more volatile than Archer Multi Cap. It trades about -0.08 of its total potential returns per unit of risk. Archer Multi Cap is currently generating about 0.06 per unit of volatility. If you would invest  1,457  in Archer Multi Cap on October 25, 2024 and sell it today you would earn a total of  53.00  from holding Archer Multi Cap or generate 3.64% return on investment over 90 days.

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

Archer Stock Fund  vs.  Archer Multi Cap

Archer Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archer Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Archer Stock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Archer Multi Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Multi Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Archer Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Archer Stock and Archer Multi

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

The idea behind Archer Stock Fund and Archer Multi Cap 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.