Correlation Between Cantaloupe and ARB IOT

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

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

Diversification Opportunities for Cantaloupe and ARB IOT

0.59

Correlation Coefficient

Cantaloupe  ARB IOT

Very weak diversification

The 3 months correlation between Cantaloupe and ARB is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cantaloupe and ARB IOT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARB IOT Group and Cantaloupe 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 Cantaloupe are associated (or correlated) with ARB IOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARB IOT Group has no effect on the direction of Cantaloupe i.e., Cantaloupe and ARB IOT go up and down completely randomly.

Pair Corralation between Cantaloupe and ARB IOT

Given the investment horizon of 90 days Cantaloupe is expected to generate 22.66 times less return on investment than ARB IOT. But when comparing it to its historical volatility, Cantaloupe is 5.83 times less risky than ARB IOT. It trades about 0.02 of its potential returns per unit of risk. ARB IOT Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  47.00  in ARB IOT Group on August 31, 2024 and sell it today you would earn a total of  4.00  from holding ARB IOT Group or generate 8.51% return on investment over 90 days.

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

Cantaloupe  vs.  ARB IOT Group

Cantaloupe

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cantaloupe are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, Cantaloupe reported solid returns over the last few months and may actually be approaching a breakup point.

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 sluggish fundamental drivers, ARB IOT sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cantaloupe and ARB IOT

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

The idea behind Cantaloupe and ARB IOT Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.