Correlation Between Barloworld and Arbe Robotics

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

By analyzing existing cross correlation between Barloworld Ltd ADR and Arbe Robotics Ltd, you can compare the effects of market volatilities on Barloworld and Arbe Robotics 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 Barloworld with a short position of Arbe Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Arbe Robotics.

Diversification Opportunities for Barloworld and Arbe Robotics

-0.31

Correlation Coefficient

Barloworld  Arbe Robotics

Very good diversification

The 3 months correlation between Barloworld and Arbe is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Arbe Robotics Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Arbe Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbe Robotics has no effect on the direction of Barloworld i.e., Barloworld and Arbe Robotics go up and down completely randomly.

Pair Corralation between Barloworld and Arbe Robotics

Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 0.57 times more return on investment than Arbe Robotics. However, Barloworld Ltd ADR is 1.75 times less risky than Arbe Robotics. It trades about 0.13 of its potential returns per unit of risk. Arbe Robotics Ltd is currently generating about -0.02 per unit of risk. If you would invest  403.00  in Barloworld Ltd ADR on September 14, 2024 and sell it today you would earn a total of  175.00  from holding Barloworld Ltd ADR or generate 43.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Arbe Robotics Ltd

Barloworld ADR

Risk-Adjusted Performance

9 of 100

OK

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

Arbe Robotics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbe Robotics Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Barloworld and Arbe Robotics

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

The idea behind Barloworld Ltd ADR and Arbe Robotics Ltd 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.