Correlation Between Fresh Grapes and Aristocrat Group

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

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

Diversification Opportunities for Fresh Grapes and Aristocrat Group

-0.04

Correlation Coefficient

Fresh Grapes  Aristocrat Group

Good diversification

The 3 months correlation between Fresh and Aristocrat is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC and Aristocrat Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Group Corp and Fresh Grapes 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 Fresh Grapes LLC are associated (or correlated) with Aristocrat Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Group Corp has no effect on the direction of Fresh Grapes i.e., Fresh Grapes and Aristocrat Group go up and down completely randomly.

Pair Corralation between Fresh Grapes and Aristocrat Group

Given the investment horizon of 90 days Fresh Grapes is expected to generate 13.99 times less return on investment than Aristocrat Group. But when comparing it to its historical volatility, Fresh Grapes LLC is 5.73 times less risky than Aristocrat Group. It trades about 0.04 of its potential returns per unit of risk. Aristocrat Group Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.20  in Aristocrat Group Corp on September 23, 2024 and sell it today you would lose (1.50) from holding Aristocrat Group Corp or give up 68.18% of portfolio value over 90 days.

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

Fresh Grapes LLC  vs.  Aristocrat Group Corp

Fresh Grapes LLC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Grapes LLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fresh Grapes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aristocrat Group Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Group Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Aristocrat Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fresh Grapes and Aristocrat Group

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

The idea behind Fresh Grapes LLC and Aristocrat Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.