Correlation Between Apple and Arena Group

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Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Arena Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Arena Group Holdings, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Arena Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Arena Group.

Diversification Opportunities for Apple and Arena Group

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Apple and Arena is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and Arena Group go up and down completely randomly.

Pair Corralation between Apple and Arena Group

Given the investment horizon of 90 days Apple is expected to generate 3.97 times less return on investment than Arena Group. But when comparing it to its historical volatility, Apple Inc is 3.59 times less risky than Arena Group. It trades about 0.03 of its potential returns per unit of risk. Arena Group Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,338  in Arena Group Holdings on September 3, 2022 and sell it today you would earn a total of  44.00  from holding Arena Group Holdings or generate 3.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Arena Group Holdings

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
0 of 100
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Apple is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

Arena Group Holdings 
Arena Performance
7 of 100
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. Despite quite sluggish technical and fundamental indicators, Arena Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arena Price Channel

Apple and Arena Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Arena Group

The main advantage of trading using opposite Apple and Arena Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.
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The idea behind Apple Inc 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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Check out your portfolio center. 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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