Correlation Between Evertec and Arbe Robotics

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

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

Diversification Opportunities for Evertec and Arbe Robotics

-0.71

Correlation Coefficient

Evertec  Arbe Robotics

Pay attention - limited upside

The 3 months correlation between Evertec and Arbe is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Arbe Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics and Evertec 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 Evertec 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 Evertec i.e., Evertec and Arbe Robotics go up and down completely randomly.

Pair Corralation between Evertec and Arbe Robotics

Given the investment horizon of 90 days Evertec is expected to generate 0.23 times more return on investment than Arbe Robotics. However, Evertec is 4.4 times less risky than Arbe Robotics. It trades about 0.07 of its potential returns per unit of risk. Arbe Robotics is currently generating about -0.04 per unit of risk. If you would invest  3,427  in Evertec on December 28, 2024 and sell it today you would earn a total of  308.00  from holding Evertec or generate 8.99% return on investment over 90 days.

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

Evertec  vs.  Arbe Robotics

Evertec

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Evertec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Arbe Robotics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arbe Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Evertec and Arbe Robotics

The main advantage of trading using opposite Evertec and Arbe Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertec 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 Evertec and Arbe Robotics 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.