Correlation Between Innovative Payment and Arax Holdings

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

By analyzing existing cross correlation between Innovative Payment Solutions and Arax Holdings Corp, you can compare the effects of market volatilities on Innovative Payment and Arax Holdings 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 Innovative Payment with a short position of Arax Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Payment and Arax Holdings.

Diversification Opportunities for Innovative Payment and Arax Holdings

0.33

Correlation Coefficient

Innovative Payment  Arax Holdings

Weak diversification

The 3 months correlation between Innovative and Arax is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Payment Solutions and Arax Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arax Holdings Corp and Innovative Payment 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 Innovative Payment Solutions are associated (or correlated) with Arax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arax Holdings Corp has no effect on the direction of Innovative Payment i.e., Innovative Payment and Arax Holdings go up and down completely randomly.

Pair Corralation between Innovative Payment and Arax Holdings

Given the investment horizon of 90 days Innovative Payment Solutions is expected to under-perform the Arax Holdings. But the otc stock apears to be less risky and, when comparing its historical volatility, Innovative Payment Solutions is 2.06 times less risky than Arax Holdings. The otc stock trades about -0.05 of its potential returns per unit of risk. The Arax Holdings Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Arax Holdings Corp on October 7, 2024 and sell it today you would earn a total of  2.00  from holding Arax Holdings Corp or generate 3.85% return on investment over 90 days.

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

Innovative Payment Solutions  vs.  Arax Holdings Corp

Innovative Payment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Payment Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Innovative Payment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Arax Holdings Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arax Holdings Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Arax Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innovative Payment and Arax Holdings

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

The idea behind Innovative Payment Solutions and Arax Holdings Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.