Correlation Between Groupon and Arko Corp

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

By analyzing existing cross correlation between Groupon and Arko Corp, you can compare the effects of market volatilities on Groupon and Arko Corp 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 Groupon with a short position of Arko Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupon and Arko Corp.

Diversification Opportunities for Groupon and Arko Corp

-0.61

Correlation Coefficient

Groupon  Arko Corp

Excellent diversification

The 3 months correlation between Groupon and Arko is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Groupon and Arko Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arko Corp and Groupon 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 Groupon are associated (or correlated) with Arko Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arko Corp has no effect on the direction of Groupon i.e., Groupon and Arko Corp go up and down completely randomly.

Pair Corralation between Groupon and Arko Corp

Given the investment horizon of 90 days Groupon is expected to generate 0.39 times more return on investment than Arko Corp. However, Groupon is 2.57 times less risky than Arko Corp. It trades about 0.14 of its potential returns per unit of risk. Arko Corp is currently generating about -0.13 per unit of risk. If you would invest  1,208  in Groupon on December 28, 2024 and sell it today you would earn a total of  674.00  from holding Groupon or generate 55.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.97%
Values	Daily Returns

Groupon  vs.  Arko Corp

Groupon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Groupon are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Groupon displayed solid returns over the last few months and may actually be approaching a breakup point.

Arko Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arko Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Groupon and Arko Corp

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

The idea behind Groupon and Arko Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.