Correlation Between ARB IOT and AgileThought

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

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

Diversification Opportunities for ARB IOT and AgileThought

-0.44

Correlation Coefficient

ARB IOT  AgileThought

Very good diversification

The 3 months correlation between ARB and AgileThought is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ARB IOT Group and AgileThought in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AgileThought and ARB IOT 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 ARB IOT Group are associated (or correlated) with AgileThought. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AgileThought has no effect on the direction of ARB IOT i.e., ARB IOT and AgileThought go up and down completely randomly.

Pair Corralation between ARB IOT and AgileThought

Given the investment horizon of 90 days ARB IOT Group is expected to generate 1.85 times more return on investment than AgileThought. However, ARB IOT is 1.85 times more volatile than AgileThought. It trades about 0.0 of its potential returns per unit of risk. AgileThought is currently generating about -0.09 per unit of risk. If you would invest  385.00  in ARB IOT Group on September 3, 2024 and sell it today you would lose (338.00) from holding ARB IOT Group or give up 87.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	36.6%
Values	Daily Returns

ARB IOT Group  vs.  AgileThought

ARB IOT Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ARB IOT Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, ARB IOT sustained solid returns over the last few months and may actually be approaching a breakup point.

AgileThought

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AgileThought has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, AgileThought is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ARB IOT and AgileThought

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

The idea behind ARB IOT Group and AgileThought 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.