Correlation Between Natures Miracle and Arm Holdings

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

By analyzing existing cross correlation between Natures Miracle Holding and Arm Holdings plc, you can compare the effects of market volatilities on Natures Miracle and Arm 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 Natures Miracle with a short position of Arm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natures Miracle and Arm Holdings.

Diversification Opportunities for Natures Miracle and Arm Holdings

0.62

Correlation Coefficient

Natures Miracle  Arm Holdings

Poor diversification

The 3 months correlation between Natures and Arm is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Natures Miracle Holding and Arm Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arm Holdings plc and Natures Miracle 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 Natures Miracle Holding are associated (or correlated) with Arm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arm Holdings plc has no effect on the direction of Natures Miracle i.e., Natures Miracle and Arm Holdings go up and down completely randomly.

Pair Corralation between Natures Miracle and Arm Holdings

Given the investment horizon of 90 days Natures Miracle Holding is expected to under-perform the Arm Holdings. In addition to that, Natures Miracle is 1.8 times more volatile than Arm Holdings plc. It trades about -0.28 of its total potential returns per unit of risk. Arm Holdings plc is currently generating about 0.07 per unit of volatility. If you would invest  13,964  in Arm Holdings plc on October 10, 2024 and sell it today you would earn a total of  556.00  from holding Arm Holdings plc or generate 3.98% return on investment over 90 days.

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

Natures Miracle Holding  vs.  Arm Holdings plc

Natures Miracle Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natures Miracle Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Arm Holdings plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arm Holdings plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Arm Holdings is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Natures Miracle and Arm Holdings

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

The idea behind Natures Miracle Holding and Arm Holdings plc 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.