Correlation Between Asset Entities and Arena Group

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

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

Diversification Opportunities for Asset Entities and Arena Group

-0.26

Correlation Coefficient

Asset Entities  Arena Group

Very good diversification

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

Pair Corralation between Asset Entities and Arena Group

Given the investment horizon of 90 days Asset Entities Class is expected to under-perform the Arena Group. But the stock apears to be less risky and, when comparing its historical volatility, Asset Entities Class is 4.74 times less risky than Arena Group. The stock trades about -0.48 of its potential returns per unit of risk. The Arena Group Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Arena Group Holdings on September 4, 2024 and sell it today you would earn a total of  58.00  from holding Arena Group Holdings or generate 65.17% return on investment over 90 days.

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

Asset Entities Class  vs.  Arena Group Holdings

Asset Entities Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asset Entities Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Arena Group Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arena Group Holdings are ranked lower than 7 (%) 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.

Pair Trading with Asset Entities and Arena Group

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

The idea behind Asset Entities Class and Arena Group Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.