Correlation Between Nayax and ARB IOT

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

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

Diversification Opportunities for Nayax and ARB IOT

-0.1

Correlation Coefficient

Nayax  ARB IOT

Good diversification

The 3 months correlation between Nayax and ARB is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nayax and ARB IOT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARB IOT Group and Nayax 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 Nayax are associated (or correlated) with ARB IOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARB IOT Group has no effect on the direction of Nayax i.e., Nayax and ARB IOT go up and down completely randomly.

Pair Corralation between Nayax and ARB IOT

Given the investment horizon of 90 days Nayax is expected to generate 0.38 times more return on investment than ARB IOT. However, Nayax is 2.66 times less risky than ARB IOT. It trades about 0.23 of its potential returns per unit of risk. ARB IOT Group is currently generating about 0.02 per unit of risk. If you would invest  2,811  in Nayax on November 19, 2024 and sell it today you would earn a total of  1,144  from holding Nayax or generate 40.68% return on investment over 90 days.

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

Nayax  vs.  ARB IOT Group

Nayax

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nayax are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Nayax showed solid returns over the last few months and may actually be approaching a breakup point.

ARB IOT Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ARB IOT Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, ARB IOT may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Nayax and ARB IOT

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

The idea behind Nayax and ARB IOT Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.