Correlation Between ARN Media and Regal Investment

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

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

Diversification Opportunities for ARN Media and Regal Investment

0.13

Correlation Coefficient

ARN Media  Regal Investment

Average diversification

The 3 months correlation between ARN and Regal is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ARN Media Limited and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment and ARN Media 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 ARN Media Limited are associated (or correlated) with Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of ARN Media i.e., ARN Media and Regal Investment go up and down completely randomly.

Pair Corralation between ARN Media and Regal Investment

Assuming the 90 days trading horizon ARN Media Limited is expected to under-perform the Regal Investment. In addition to that, ARN Media is 2.31 times more volatile than Regal Investment. It trades about 0.0 of its total potential returns per unit of risk. Regal Investment is currently generating about 0.08 per unit of volatility. If you would invest  242.00  in Regal Investment on September 30, 2024 and sell it today you would earn a total of  94.00  from holding Regal Investment or generate 38.84% return on investment over 90 days.

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

ARN Media Limited  vs.  Regal Investment

ARN Media Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ARN Media Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ARN Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Regal Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ARN Media and Regal Investment

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

The idea behind ARN Media Limited and Regal Investment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.