Correlation Between Palantir Technologies and Arax Holdings

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

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

Diversification Opportunities for Palantir Technologies and Arax Holdings

-0.42

Correlation Coefficient

Palantir Technologies  Arax Holdings

Very good diversification

The 3 months correlation between Palantir and Arax is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class 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 Palantir Technologies 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 Palantir Technologies Class 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 Palantir Technologies i.e., Palantir Technologies and Arax Holdings go up and down completely randomly.

Pair Corralation between Palantir Technologies and Arax Holdings

Given the investment horizon of 90 days Palantir Technologies Class is expected to under-perform the Arax Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Palantir Technologies Class is 14.08 times less risky than Arax Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The Arax Holdings Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  54.00  in Arax Holdings Corp on October 26, 2024 and sell it today you would earn a total of  18.00  from holding Arax Holdings Corp or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Palantir Technologies Class  vs.  Arax Holdings Corp

Palantir Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Arax Holdings Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arax Holdings Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Arax Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palantir Technologies and Arax Holdings

The main advantage of trading using opposite Palantir Technologies and Arax Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies 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 Palantir Technologies Class 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.