Correlation Between Alfi and Arbe Robotics

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Can any of the company-specific risk be diversified away by investing in both Alfi 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 Alfi and Arbe Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfi Inc and Arbe Robotics, you can compare the effects of market volatilities on Alfi 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 Alfi with a short position of Arbe Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfi and Arbe Robotics.

Diversification Opportunities for Alfi and Arbe Robotics

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Alfi and Arbe Robotics is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alfi Inc and Arbe Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics and Alfi 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 Alfi Inc 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 Alfi i.e., Alfi and Arbe Robotics go up and down completely randomly.

Pair Corralation between Alfi and Arbe Robotics

Considering the 90-day investment horizon Alfi Inc is expected to generate 1.27 times more return on investment than Arbe Robotics. However, Alfi is 1.27 times more volatile than Arbe Robotics. It trades about 0.04 of its potential returns per unit of risk. Arbe Robotics is currently generating about -0.14 per unit of risk. If you would invest  116.00  in Alfi Inc on April 6, 2022 and sell it today you would earn a total of  2.00  from holding Alfi Inc or generate 1.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Alfi Inc  vs.  Arbe Robotics

 Performance (%) 
      Timeline 
Alfi Inc 
Alfi Performance
0 of 100
Over the last 90 days Alfi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alfi Price Channel

Arbe Robotics 
Arbe Robotics Performance
0 of 100
Over the last 90 days Arbe Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Arbe Robotics Price Channel

Alfi and Arbe Robotics Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alfi and Arbe Robotics

The main advantage of trading using opposite Alfi and Arbe Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfi 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 Alfi Inc 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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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