Correlation Between Tenet Fintech and Arax Holdings

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

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

Diversification Opportunities for Tenet Fintech and Arax Holdings

-0.31

Correlation Coefficient

Tenet Fintech  Arax Holdings

Very good diversification

The 3 months correlation between Tenet and Arax is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tenet Fintech Group 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 Tenet Fintech 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 Tenet Fintech Group 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 Tenet Fintech i.e., Tenet Fintech and Arax Holdings go up and down completely randomly.

Pair Corralation between Tenet Fintech and Arax Holdings

Assuming the 90 days horizon Tenet Fintech Group is expected to generate 3.87 times more return on investment than Arax Holdings. However, Tenet Fintech is 3.87 times more volatile than Arax Holdings Corp. It trades about 0.04 of its potential returns per unit of risk. Arax Holdings Corp is currently generating about -0.16 per unit of risk. If you would invest  5.80  in Tenet Fintech Group on September 23, 2024 and sell it today you would lose (0.50) from holding Tenet Fintech Group or give up 8.62% of portfolio value over 90 days.

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

Tenet Fintech Group  vs.  Arax Holdings Corp

Tenet Fintech Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tenet Fintech Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Tenet Fintech reported solid returns over the last few months and may actually be approaching a breakup point.

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 inconsistent 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 Tenet Fintech and Arax Holdings

The main advantage of trading using opposite Tenet Fintech and Arax Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenet Fintech 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 Tenet Fintech Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.