Correlation Between Applied Blockchain and Arena

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

Diversification Opportunities for Applied Blockchain and Arena

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Applied and Arena is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and The Arena Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Group and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with Arena. 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 has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and Arena go up and down completely randomly.

Pair Corralation between Applied Blockchain and Arena

Given the investment horizon of 90 days Applied Blockchain is expected to generate 2.87 times more return on investment than Arena. However, Applied Blockchain is 2.87 times more volatile than The Arena Group. It trades about 0.12 of its potential returns per unit of risk. The Arena Group is currently generating about 0.12 per unit of risk. If you would invest  96.00  in Applied Blockchain on July 1, 2022 and sell it today you would earn a total of  78.00  from holding Applied Blockchain or generate 81.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Applied Blockchain  vs.  The Arena Group

 Performance (%) 
       Timeline  
Applied Blockchain 
Applied Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Applied Price Channel

Arena Group 
Arena Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Arena Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Arena disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arena Price Channel

Applied Blockchain and Arena Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Applied Blockchain and Arena

The main advantage of trading using opposite Applied Blockchain and Arena positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Blockchain position performs unexpectedly, Arena 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 will offset losses from the drop in Arena's long position.
Applied Blockchain vs. Amazon Inc
The idea behind Applied Blockchain and The Arena Group 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.
Arena vs. Microsoft Corp
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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