Correlation Between Astonriver Road and Arga Emerging

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

By analyzing existing cross correlation between Astonriver Road Independent and Arga Emerging Markets, you can compare the effects of market volatilities on Astonriver Road and Arga Emerging 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 Astonriver Road with a short position of Arga Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astonriver Road and Arga Emerging.

Diversification Opportunities for Astonriver Road and Arga Emerging

0.96

Correlation Coefficient

Astonriver Road  Arga Emerging

Almost no diversification

The 3 months correlation between Astonriver and Arga is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Astonriver Road Independent and Arga Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arga Emerging Markets and Astonriver Road 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 Astonriver Road Independent are associated (or correlated) with Arga Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arga Emerging Markets has no effect on the direction of Astonriver Road i.e., Astonriver Road and Arga Emerging go up and down completely randomly.

Pair Corralation between Astonriver Road and Arga Emerging

Assuming the 90 days horizon Astonriver Road is expected to generate 1.07 times less return on investment than Arga Emerging. But when comparing it to its historical volatility, Astonriver Road Independent is 1.0 times less risky than Arga Emerging. It trades about 0.03 of its potential returns per unit of risk. Arga Emerging Markets is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  900.00  in Arga Emerging Markets on September 30, 2024 and sell it today you would earn a total of  125.00  from holding Arga Emerging Markets or generate 13.89% return on investment over 90 days.

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

Astonriver Road Independent  vs.  Arga Emerging Markets

Astonriver Road Inde

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astonriver Road Independent has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Arga Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arga Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Astonriver Road and Arga Emerging

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

The idea behind Astonriver Road Independent and Arga Emerging Markets 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.