Correlation Between Ichia Technologies and Arbor Technology

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

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

Diversification Opportunities for Ichia Technologies and Arbor Technology

0.01

Correlation Coefficient

Ichia Technologies  Arbor Technology

Significant diversification

The 3 months correlation between Ichia and Arbor is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ichia Technologies and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Technology and Ichia 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 Ichia Technologies are associated (or correlated) with Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of Ichia Technologies i.e., Ichia Technologies and Arbor Technology go up and down completely randomly.

Pair Corralation between Ichia Technologies and Arbor Technology

Assuming the 90 days trading horizon Ichia Technologies is expected to under-perform the Arbor Technology. But the stock apears to be less risky and, when comparing its historical volatility, Ichia Technologies is 1.15 times less risky than Arbor Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Arbor Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,160  in Arbor Technology on August 31, 2024 and sell it today you would earn a total of  340.00  from holding Arbor Technology or generate 8.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Ichia Technologies  vs.  Arbor Technology

Ichia Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ichia Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ichia Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Arbor Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ichia Technologies and Arbor Technology

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

The idea behind Ichia Technologies and Arbor Technology 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.