Correlation Between CubicFarm Systems and Arts Way

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

By analyzing existing cross correlation between CubicFarm Systems Corp and Arts Way Manufacturing Co, you can compare the effects of market volatilities on CubicFarm Systems and Arts Way 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 CubicFarm Systems with a short position of Arts Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubicFarm Systems and Arts Way.

Diversification Opportunities for CubicFarm Systems and Arts Way

0.02

Correlation Coefficient

CubicFarm Systems  Arts Way

Significant diversification

The 3 months correlation between CubicFarm and Arts is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CubicFarm Systems Corp and Arts Way Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arts Way Manufacturing and CubicFarm Systems 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 CubicFarm Systems Corp are associated (or correlated) with Arts Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arts Way Manufacturing has no effect on the direction of CubicFarm Systems i.e., CubicFarm Systems and Arts Way go up and down completely randomly.

Pair Corralation between CubicFarm Systems and Arts Way

Assuming the 90 days horizon CubicFarm Systems Corp is expected to generate 133.26 times more return on investment than Arts Way. However, CubicFarm Systems is 133.26 times more volatile than Arts Way Manufacturing Co. It trades about 0.31 of its potential returns per unit of risk. Arts Way Manufacturing Co is currently generating about -0.22 per unit of risk. If you would invest  3.50  in CubicFarm Systems Corp on September 16, 2024 and sell it today you would earn a total of  3.50  from holding CubicFarm Systems Corp or generate 100.0% return on investment over 90 days.

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

CubicFarm Systems Corp  vs.  Arts Way Manufacturing Co

CubicFarm Systems Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CubicFarm Systems Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, CubicFarm Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Arts Way Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arts Way Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic 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 CubicFarm Systems and Arts Way

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

The idea behind CubicFarm Systems Corp and Arts Way Manufacturing Co 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.