Correlation Between ARDR and Boba Network

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

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

Diversification Opportunities for ARDR and Boba Network

0.82

Correlation Coefficient

ARDR  Boba Network

Very poor diversification

The 3 months correlation between ARDR and Boba is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ARDR and Boba Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boba Network and ARDR 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 ARDR are associated (or correlated) with Boba Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boba Network has no effect on the direction of ARDR i.e., ARDR and Boba Network go up and down completely randomly.

Pair Corralation between ARDR and Boba Network

Assuming the 90 days trading horizon ARDR is expected to generate 1.13 times more return on investment than Boba Network. However, ARDR is 1.13 times more volatile than Boba Network. It trades about -0.12 of its potential returns per unit of risk. Boba Network is currently generating about -0.22 per unit of risk. If you would invest  14.00  in ARDR on January 25, 2024 and sell it today you would lose (3.00) from holding ARDR or give up 21.43% of portfolio value over 90 days.

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

ARDR  vs.  Boba Network

ARDR

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ARDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ARDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Boba Network

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boba Network are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Boba Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARDR and Boba Network

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

The idea behind ARDR and Boba Network 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.