Correlation Between Arkham and 0x

Can any of the company-specific risk be diversified away by investing in both Arkham and 0x 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 Arkham and 0x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arkham and 0x, you can compare the effects of market volatilities on Arkham and 0x 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 Arkham with a short position of 0x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkham and 0x.

Diversification Opportunities for Arkham and 0x

0.72

Correlation Coefficient

Arkham  0x

Poor diversification

The 3 months correlation between Arkham and 0x is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Arkham and 0x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 0x and Arkham 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 Arkham are associated (or correlated) with 0x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 0x has no effect on the direction of Arkham i.e., Arkham and 0x go up and down completely randomly.

Pair Corralation between Arkham and 0x

Assuming the 90 days trading horizon Arkham is expected to generate 1.16 times more return on investment than 0x. However, Arkham is 1.16 times more volatile than 0x. It trades about 0.24 of its potential returns per unit of risk. 0x is currently generating about 0.22 per unit of risk. If you would invest  96.00  in Arkham on September 2, 2024 and sell it today you would earn a total of  145.00  from holding Arkham or generate 151.04% return on investment over 90 days.

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

Arkham  vs.  0x

Arkham

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arkham are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Arkham exhibited solid returns over the last few months and may actually be approaching a breakup point.

0x

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 0x are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, 0x exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arkham and 0x

The main advantage of trading using opposite Arkham and 0x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkham position performs unexpectedly, 0x 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 0x will offset losses from the drop in 0x's long position.

The idea behind Arkham and 0x 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.