Correlation Between Aran Research and Shikun Binui

Can any of the company-specific risk be diversified away by investing in both Aran Research and Shikun Binui 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 Aran Research and Shikun Binui into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Aran Research and Shikun Binui

0.26

Correlation Coefficient

Aran Research  Shikun Binui

Modest diversification

The 3 months correlation between Aran and Shikun is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aran Research and and Shikun Binui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shikun Binui and Aran Research 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 Aran Research and are associated (or correlated) with Shikun Binui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shikun Binui has no effect on the direction of Aran Research i.e., Aran Research and Shikun Binui go up and down completely randomly.

Pair Corralation between Aran Research and Shikun Binui

Assuming the 90 days trading horizon Aran Research is expected to generate 11.65 times less return on investment than Shikun Binui. But when comparing it to its historical volatility, Aran Research and is 1.57 times less risky than Shikun Binui. It trades about 0.06 of its potential returns per unit of risk. Shikun Binui is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  101,600  in Shikun Binui on September 12, 2024 and sell it today you would earn a total of  37,700  from holding Shikun Binui or generate 37.11% return on investment over 90 days.

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

Aran Research and  vs.  Shikun Binui

Aran Research

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aran Research and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Aran Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shikun Binui

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shikun Binui are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shikun Binui sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aran Research and Shikun Binui

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

The idea behind Aran Research and and Shikun Binui 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.