Correlation Between G5 Entertainment and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Aeorema Communications 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 G5 Entertainment and Aeorema Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G5 Entertainment AB and Aeorema Communications Plc, you can compare the effects of market volatilities on G5 Entertainment and Aeorema Communications 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 G5 Entertainment with a short position of Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Aeorema Communications.
Diversification Opportunities for G5 Entertainment and Aeorema Communications
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0QUS and Aeorema is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment AB and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications and G5 Entertainment 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 G5 Entertainment AB are associated (or correlated) with Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Aeorema Communications go up and down completely randomly.
Pair Corralation between G5 Entertainment and Aeorema Communications
Assuming the 90 days trading horizon G5 Entertainment AB is expected to generate 0.98 times more return on investment than Aeorema Communications. However, G5 Entertainment AB is 1.02 times less risky than Aeorema Communications. It trades about 0.24 of its potential returns per unit of risk. Aeorema Communications Plc is currently generating about -0.21 per unit of risk. If you would invest 11,800 in G5 Entertainment AB on November 4, 2024 and sell it today you would earn a total of 1,200 from holding G5 Entertainment AB or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
G5 Entertainment AB vs. Aeorema Communications Plc
Performance |
| Timeline |
| G5 Entertainment |
| Aeorema Communications |
G5 Entertainment and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and Aeorema Communications
The main advantage of trading using opposite G5 Entertainment and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| G5 Entertainment vs. Ashtead Technology Holdings | G5 Entertainment vs. Diversified Energy | G5 Entertainment vs. Take Two Interactive Software | G5 Entertainment vs. Chrysalis Investments |
| Aeorema Communications vs. Edinburgh Investment Trust | Aeorema Communications vs. Beowulf Mining | Aeorema Communications vs. Kinnevik Investment AB | Aeorema Communications vs. Griffin Mining |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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