Correlation Between Bio Meat and Arena Star

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

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

Diversification Opportunities for Bio Meat and Arena Star

0.47

Correlation Coefficient

Bio Meat  Arena Star

Very weak diversification

The 3 months correlation between Bio and Arena is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bio Meat Foodtech and Arena Star Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Star Group and Bio Meat 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 Bio Meat Foodtech are associated (or correlated) with Arena Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Star Group has no effect on the direction of Bio Meat i.e., Bio Meat and Arena Star go up and down completely randomly.

Pair Corralation between Bio Meat and Arena Star

Assuming the 90 days trading horizon Bio Meat is expected to generate 46.16 times less return on investment than Arena Star. In addition to that, Bio Meat is 1.62 times more volatile than Arena Star Group. It trades about 0.0 of its total potential returns per unit of risk. Arena Star Group is currently generating about 0.13 per unit of volatility. If you would invest  21,110  in Arena Star Group on September 26, 2024 and sell it today you would earn a total of  2,010  from holding Arena Star Group or generate 9.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bio Meat Foodtech  vs.  Arena Star Group

Bio Meat Foodtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Meat Foodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bio Meat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Arena Star Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arena Star Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Arena Star may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bio Meat and Arena Star

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

The idea behind Bio Meat Foodtech and Arena Star 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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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.