Correlation Between Pengana Private and ARN Media

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

By analyzing existing cross correlation between Pengana Private Equity and ARN Media Limited, you can compare the effects of market volatilities on Pengana Private and ARN Media 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 Pengana Private with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pengana Private and ARN Media.

Diversification Opportunities for Pengana Private and ARN Media

0.46

Correlation Coefficient

Pengana Private  ARN Media

Very weak diversification

The 3 months correlation between Pengana and ARN is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pengana Private Equity and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Pengana Private 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 Pengana Private Equity are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Pengana Private i.e., Pengana Private and ARN Media go up and down completely randomly.

Pair Corralation between Pengana Private and ARN Media

Assuming the 90 days trading horizon Pengana Private Equity is expected to generate 1.33 times more return on investment than ARN Media. However, Pengana Private is 1.33 times more volatile than ARN Media Limited. It trades about -0.02 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.08 per unit of risk. If you would invest  133.00  in Pengana Private Equity on December 29, 2024 and sell it today you would lose (9.00) from holding Pengana Private Equity or give up 6.77% of portfolio value over 90 days.

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

Pengana Private Equity  vs.  ARN Media Limited

Pengana Private Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pengana Private Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pengana Private is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ARN Media Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARN Media Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Pengana Private and ARN Media

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

The idea behind Pengana Private Equity and ARN Media Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..