Correlation Between Kibush Capital and Arena

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

Diversification Opportunities for Kibush Capital and Arena

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between Kibush and Arena is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kibush Capital Corp and The Arena Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Group and Kibush Capital 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 Kibush Capital Corp 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 Kibush Capital i.e., Kibush Capital and Arena go up and down completely randomly.

Pair Corralation between Kibush Capital and Arena

Given the investment horizon of 90 days Kibush Capital is expected to generate 1.23 times less return on investment than Arena. In addition to that, Kibush Capital is 2.46 times more volatile than The Arena Group. It trades about 0.01 of its total potential returns per unit of risk. The Arena Group is currently generating about 0.03 per unit of volatility. If you would invest  1,320  in The Arena Group on August 31, 2022 and sell it today you would earn a total of  36.00  from holding The Arena Group or generate 2.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.6%
ValuesDaily Returns

Kibush Capital Corp  vs.  The Arena Group

 Performance (%) 
       Timeline  
Kibush Capital Corp 
Kibush Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Kibush Capital Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Kibush Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Kibush 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 unsteady technical and fundamental indicators, Arena disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arena Price Channel

Kibush Capital and Arena Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kibush Capital and Arena

The main advantage of trading using opposite Kibush Capital and Arena positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kibush Capital 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.
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The idea behind Kibush Capital Corp 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.
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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