Correlation Between Arena Star and Gix Internet
Can any of the company-specific risk be diversified away by investing in both Arena Star and Gix Internet 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 Star and Gix Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arena Star Group and Gix Internet, you can compare the effects of market volatilities on Arena Star and Gix Internet 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 Star with a short position of Gix Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arena Star and Gix Internet.
Diversification Opportunities for Arena Star and Gix Internet
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arena and Gix is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Arena Star Group and Gix Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gix Internet and Arena Star 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 Arena Star Group are associated (or correlated) with Gix Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gix Internet has no effect on the direction of Arena Star i.e., Arena Star and Gix Internet go up and down completely randomly.
Pair Corralation between Arena Star and Gix Internet
Assuming the 90 days trading horizon Arena Star Group is expected to under-perform the Gix Internet. But the stock apears to be less risky and, when comparing its historical volatility, Arena Star Group is 3.59 times less risky than Gix Internet. The stock trades about -0.31 of its potential returns per unit of risk. The Gix Internet is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,630 in Gix Internet on January 25, 2024 and sell it today you would lose (80.00) from holding Gix Internet or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arena Star Group vs. Gix Internet
Performance |
| Timeline |
| Arena Star Group |
| Gix Internet |
Arena Star and Gix Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arena Star and Gix Internet
The main advantage of trading using opposite Arena Star and Gix Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arena Star position performs unexpectedly, Gix Internet 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 Gix Internet will offset losses from the drop in Gix Internet's long position.The idea behind Arena Star Group and Gix Internet 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.| Gix Internet vs. Bank Leumi Le Israel | Gix Internet vs. Teva Pharmaceutical Industries | Gix Internet vs. Bank Hapoalim | Gix Internet vs. Elbit Systems |
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 the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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