Correlation Between Internet Infinity and Arax Holdings

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

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

Diversification Opportunities for Internet Infinity and Arax Holdings

0.61

Correlation Coefficient

Internet Infinity  Arax Holdings

Poor diversification

The 3 months correlation between Internet and Arax is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Internet Infinity and Arax Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arax Holdings Corp and Internet Infinity 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 Internet Infinity are associated (or correlated) with Arax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arax Holdings Corp has no effect on the direction of Internet Infinity i.e., Internet Infinity and Arax Holdings go up and down completely randomly.

Pair Corralation between Internet Infinity and Arax Holdings

Given the investment horizon of 90 days Internet Infinity is expected to generate 1.34 times more return on investment than Arax Holdings. However, Internet Infinity is 1.34 times more volatile than Arax Holdings Corp. It trades about 0.03 of its potential returns per unit of risk. Arax Holdings Corp is currently generating about -0.2 per unit of risk. If you would invest  1.10  in Internet Infinity on September 16, 2024 and sell it today you would lose (0.04) from holding Internet Infinity or give up 3.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Internet Infinity  vs.  Arax Holdings Corp

Internet Infinity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Infinity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Internet Infinity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Arax Holdings Corp

Risk-Adjusted Performance

0 of 100

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 abnormal 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.

Pair Trading with Internet Infinity and Arax Holdings

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

The idea behind Internet Infinity and Arax Holdings Corp 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.