Correlation Between Arsenal Digital and New Generation

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

By analyzing existing cross correlation between Arsenal Digital Holdings and New Generation Consumer, you can compare the effects of market volatilities on Arsenal Digital and New Generation 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 Arsenal Digital with a short position of New Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arsenal Digital and New Generation.

Diversification Opportunities for Arsenal Digital and New Generation

0.46

Correlation Coefficient

Arsenal Digital  New Generation

Very weak diversification

The 3 months correlation between Arsenal and New is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Arsenal Digital Holdings and New Generation Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Generation Consumer and Arsenal Digital 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 Arsenal Digital Holdings are associated (or correlated) with New Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Generation Consumer has no effect on the direction of Arsenal Digital i.e., Arsenal Digital and New Generation go up and down completely randomly.

Pair Corralation between Arsenal Digital and New Generation

Given the investment horizon of 90 days Arsenal Digital Holdings is expected to under-perform the New Generation. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arsenal Digital Holdings is 1.51 times less risky than New Generation. The pink sheet trades about -0.03 of its potential returns per unit of risk. The New Generation Consumer is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.07  in New Generation Consumer on December 25, 2024 and sell it today you would lose (0.02) from holding New Generation Consumer or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

Arsenal Digital Holdings  vs.  New Generation Consumer

Arsenal Digital Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arsenal Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

New Generation Consumer

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Generation Consumer are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, New Generation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arsenal Digital and New Generation

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

The idea behind Arsenal Digital Holdings and New Generation Consumer 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.