Correlation Between Arax Holdings and Arbe Robotics

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Can any of the company-specific risk be diversified away by investing in both Arax Holdings and Arbe Robotics 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 Arax Holdings and Arbe Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arax Holdings Corp and Arbe Robotics Ltd, you can compare the effects of market volatilities on Arax Holdings and Arbe Robotics 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 Arax Holdings with a short position of Arbe Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arax Holdings and Arbe Robotics.

Diversification Opportunities for Arax Holdings and Arbe Robotics

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Arax and Arbe is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arax Holdings Corp and Arbe Robotics Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics and Arax Holdings 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 Arax Holdings Corp are associated (or correlated) with Arbe Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbe Robotics has no effect on the direction of Arax Holdings i.e., Arax Holdings and Arbe Robotics go up and down completely randomly.

Pair Corralation between Arax Holdings and Arbe Robotics

Given the investment horizon of 90 days Arax Holdings Corp is expected to under-perform the Arbe Robotics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arax Holdings Corp is 2.98 times less risky than Arbe Robotics. The pink sheet trades about -0.2 of its potential returns per unit of risk. The Arbe Robotics Ltd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Arbe Robotics Ltd on September 5, 2024 and sell it today you would lose (3.00) from holding Arbe Robotics Ltd or give up 16.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy92.86%
ValuesDaily Returns

Arax Holdings Corp  vs.  Arbe Robotics Ltd

 Performance 
       Timeline  
Arax Holdings Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Arax Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Arbe Robotics 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Arbe Robotics Ltd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Arbe Robotics showed solid returns over the last few months and may actually be approaching a breakup point.

Arax Holdings and Arbe Robotics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arax Holdings and Arbe Robotics

The main advantage of trading using opposite Arax Holdings and Arbe Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arax Holdings position performs unexpectedly, Arbe Robotics 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 Arbe Robotics will offset losses from the drop in Arbe Robotics' long position.
The idea behind Arax Holdings Corp and Arbe Robotics Ltd 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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