Correlation Between Arena Group and YY

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

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

Diversification Opportunities for Arena Group and YY

0.26

Correlation Coefficient

Arena Group  YY

Modest diversification

The 3 months correlation between Arena and YY is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Arena Group Holdings and YY Inc Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Inc Class and Arena Group 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 Arena Group Holdings are associated (or correlated) with YY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Inc Class has no effect on the direction of Arena Group i.e., Arena Group and YY go up and down completely randomly.

Pair Corralation between Arena Group and YY

Given the investment horizon of 90 days Arena Group Holdings is expected to generate 1.66 times more return on investment than YY. However, Arena Group is 1.66 times more volatile than YY Inc Class. It trades about 0.05 of its potential returns per unit of risk. YY Inc Class is currently generating about 0.03 per unit of risk. If you would invest  142.00  in Arena Group Holdings on December 25, 2024 and sell it today you would earn a total of  11.00  from holding Arena Group Holdings or generate 7.75% return on investment over 90 days.

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

Arena Group Holdings  vs.  YY Inc Class

Arena Group Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arena Group Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Arena Group displayed solid returns over the last few months and may actually be approaching a breakup point.

YY Inc Class

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YY Inc Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, YY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arena Group and YY

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

The idea behind Arena Group Holdings and YY Inc Class 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.