Correlation Between Fridenson and Aran Research

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

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

Diversification Opportunities for Fridenson and Aran Research

-0.02

Correlation Coefficient

Fridenson  Aran Research

Good diversification

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

Pair Corralation between Fridenson and Aran Research

Assuming the 90 days trading horizon Fridenson is expected to generate 1.32 times more return on investment than Aran Research. However, Fridenson is 1.32 times more volatile than Aran Research and. It trades about 0.11 of its potential returns per unit of risk. Aran Research and is currently generating about 0.03 per unit of risk. If you would invest  476,100  in Fridenson on December 5, 2024 and sell it today you would earn a total of  80,200  from holding Fridenson or generate 16.85% return on investment over 90 days.

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

Fridenson  vs.  Aran Research and

Fridenson

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fridenson are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fridenson sustained solid returns over the last few months and may actually be approaching a breakup point.

Aran Research

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aran Research and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Aran Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fridenson and Aran Research

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

The idea behind Fridenson and Aran Research and 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.