Correlation Between Arena Group and Bodyflight Sweden

Can any of the company-specific risk be diversified away by investing in both Arena Group and Bodyflight Sweden 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 Group and Bodyflight Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arena Group Holdings and Bodyflight Sweden AB, you can compare the effects of market volatilities on Arena Group and Bodyflight Sweden 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 Group with a short position of Bodyflight Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arena Group and Bodyflight Sweden.

Diversification Opportunities for Arena Group and Bodyflight Sweden

0.26

Correlation Coefficient

Arena Group  Bodyflight Sweden

Modest diversification

The 3 months correlation between Arena and Bodyflight is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Arena Group Holdings and Bodyflight Sweden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bodyflight Sweden and Arena Group 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 Group Holdings are associated (or correlated) with Bodyflight Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bodyflight Sweden has no effect on the direction of Arena Group i.e., Arena Group and Bodyflight Sweden go up and down completely randomly.

Pair Corralation between Arena Group and Bodyflight Sweden

If you would invest  814.00  in Bodyflight Sweden AB on January 21, 2024 and sell it today you would earn a total of  0.00  from holding Bodyflight Sweden AB or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Arena Group Holdings  vs.  Bodyflight Sweden AB

Arena Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arena Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak technical and fundamental indicators, Arena Group may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Bodyflight Sweden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bodyflight Sweden AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Bodyflight Sweden is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arena Group and Bodyflight Sweden

The main advantage of trading using opposite Arena Group and Bodyflight Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arena Group position performs unexpectedly, Bodyflight Sweden 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 Bodyflight Sweden will offset losses from the drop in Bodyflight Sweden's long position.

The idea behind Arena Group Holdings and Bodyflight Sweden AB 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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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.