Correlation Between Arena Hospitality and AD Plastik

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

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

Diversification Opportunities for Arena Hospitality and AD Plastik

0.53

Correlation Coefficient

Arena Hospitality  AD Plastik

Very weak diversification

The 3 months correlation between Arena and ADPL is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Arena Hospitality Group and AD Plastik dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AD Plastik dd and Arena Hospitality 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 Hospitality Group are associated (or correlated) with AD Plastik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AD Plastik dd has no effect on the direction of Arena Hospitality i.e., Arena Hospitality and AD Plastik go up and down completely randomly.

Pair Corralation between Arena Hospitality and AD Plastik

Assuming the 90 days trading horizon Arena Hospitality Group is expected to generate 0.41 times more return on investment than AD Plastik. However, Arena Hospitality Group is 2.44 times less risky than AD Plastik. It trades about 0.16 of its potential returns per unit of risk. AD Plastik dd is currently generating about 0.06 per unit of risk. If you would invest  3,160  in Arena Hospitality Group on December 30, 2024 and sell it today you would earn a total of  340.00  from holding Arena Hospitality Group or generate 10.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	82.26%
Values	Daily Returns

Arena Hospitality Group  vs.  AD Plastik dd

Arena Hospitality

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arena Hospitality Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Arena Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

AD Plastik dd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AD Plastik dd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, AD Plastik unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arena Hospitality and AD Plastik

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

The idea behind Arena Hospitality Group and AD Plastik dd 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.