Correlation Between Prime Securities and Arbe Robotics

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

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

Diversification Opportunities for Prime Securities and Arbe Robotics

-0.21

Correlation Coefficient

Prime Securities  Arbe Robotics

Very good diversification

The 3 months correlation between Prime and Arbe is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Prime Securities Limited and Arbe Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics and Prime Securities 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 Prime Securities Limited are associated (or correlated) with Arbe Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbe Robotics has no effect on the direction of Prime Securities i.e., Prime Securities and Arbe Robotics go up and down completely randomly.

Pair Corralation between Prime Securities and Arbe Robotics

Assuming the 90 days trading horizon Prime Securities Limited is expected to generate 1.16 times more return on investment than Arbe Robotics. However, Prime Securities is 1.16 times more volatile than Arbe Robotics. It trades about -0.07 of its potential returns per unit of risk. Arbe Robotics is currently generating about -0.3 per unit of risk. If you would invest  18,655  in Prime Securities Limited on February 4, 2024 and sell it today you would lose (545.00) from holding Prime Securities Limited or give up 2.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.96%
Values	Daily Returns

Prime Securities Limited  vs.  Arbe Robotics

Prime Securities

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Securities Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Prime Securities is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Arbe Robotics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arbe Robotics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Arbe Robotics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Prime Securities and Arbe Robotics

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

The idea behind Prime Securities Limited and Arbe Robotics 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.