Correlation Between Arena and Decisionpoint Systems

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

Diversification Opportunities for Arena and Decisionpoint Systems

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Arena and Decisionpoint is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Arena Group and Decisionpoint Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decisionpoint Systems and Arena 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 The Arena Group are associated (or correlated) with Decisionpoint Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decisionpoint Systems has no effect on the direction of Arena i.e., Arena and Decisionpoint Systems go up and down completely randomly.

Pair Corralation between Arena and Decisionpoint Systems

Given the investment horizon of 90 days The Arena Group is expected to under-perform the Decisionpoint Systems. But the stock apears to be less risky and, when comparing its historical volatility, The Arena Group is 1.12 times less risky than Decisionpoint Systems. The stock trades about -0.02 of its potential returns per unit of risk. The Decisionpoint Systems is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  419.00  in Decisionpoint Systems on May 21, 2022 and sell it today you would earn a total of  248.00  from holding Decisionpoint Systems or generate 59.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

The Arena Group  vs.  Decisionpoint Systems

 Performance (%) 
       Timeline  
Arena Group 
Arena Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Arena Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Arena may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Arena Price Channel

Decisionpoint Systems 
Decisionpoint Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Decisionpoint Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Decisionpoint Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Decisionpoint Price Channel

Arena and Decisionpoint Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arena and Decisionpoint Systems

The main advantage of trading using opposite Arena and Decisionpoint Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arena position performs unexpectedly, Decisionpoint Systems 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 Decisionpoint Systems will offset losses from the drop in Decisionpoint Systems' long position.
The idea behind The Arena Group and Decisionpoint Systems 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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