Correlation Between ARYA Sciences and Magnum Opus

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

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

Diversification Opportunities for ARYA Sciences and Magnum Opus

-0.67

Correlation Coefficient

ARYA Sciences  Magnum Opus

Excellent diversification

The 3 months correlation between ARYA and Magnum is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding ARYA Sciences Acquisition and Magnum Opus Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnum Opus Acquisition and ARYA Sciences 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 ARYA Sciences Acquisition are associated (or correlated) with Magnum Opus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnum Opus Acquisition has no effect on the direction of ARYA Sciences i.e., ARYA Sciences and Magnum Opus go up and down completely randomly.

Pair Corralation between ARYA Sciences and Magnum Opus

If you would invest  1,049  in Magnum Opus Acquisition on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Magnum Opus Acquisition or generate 0.0% return on investment over 90 days.

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

ARYA Sciences Acquisition  vs.  Magnum Opus Acquisition

ARYA Sciences Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARYA Sciences Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ARYA Sciences is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Magnum Opus Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magnum Opus Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Magnum Opus is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ARYA Sciences and Magnum Opus

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

The idea behind ARYA Sciences Acquisition and Magnum Opus Acquisition 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.