Correlation Between ARB IOT and 9F

Can any of the company-specific risk be diversified away by investing in both ARB IOT and 9F 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 ARB IOT and 9F into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARB IOT Group and 9F Inc, you can compare the effects of market volatilities on ARB IOT and 9F 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 ARB IOT with a short position of 9F. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARB IOT and 9F.

Diversification Opportunities for ARB IOT and 9F

0.07

Correlation Coefficient

ARB IOT  9F

Significant diversification

The 3 months correlation between ARB and 9F is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ARB IOT Group and 9F Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 9F Inc and ARB IOT 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 ARB IOT Group are associated (or correlated) with 9F. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 9F Inc has no effect on the direction of ARB IOT i.e., ARB IOT and 9F go up and down completely randomly.

Pair Corralation between ARB IOT and 9F

Given the investment horizon of 90 days ARB IOT Group is expected to under-perform the 9F. But the stock apears to be less risky and, when comparing its historical volatility, ARB IOT Group is 2.54 times less risky than 9F. The stock trades about -0.52 of its potential returns per unit of risk. The 9F Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  271.00  in 9F Inc on February 21, 2024 and sell it today you would earn a total of  44.00  from holding 9F Inc or generate 16.24% return on investment over 90 days.

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

ARB IOT Group  vs.  9F Inc

ARB IOT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARB IOT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

9F Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 9F Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, 9F unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARB IOT and 9F

The main advantage of trading using opposite ARB IOT and 9F positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARB IOT position performs unexpectedly, 9F 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 9F will offset losses from the drop in 9F's long position.

The idea behind ARB IOT Group and 9F Inc 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.