Correlation Between Newretail and Chinese Gamer
Can any of the company-specific risk be diversified away by investing in both Newretail and Chinese Gamer 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 Newretail and Chinese Gamer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and Chinese Gamer International, you can compare the effects of market volatilities on Newretail and Chinese Gamer 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 Newretail with a short position of Chinese Gamer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and Chinese Gamer.
Diversification Opportunities for Newretail and Chinese Gamer
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newretail and Chinese is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Chinese Gamer International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Gamer Intern and Newretail 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 Newretail Co are associated (or correlated) with Chinese Gamer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Gamer Intern has no effect on the direction of Newretail i.e., Newretail and Chinese Gamer go up and down completely randomly.
Pair Corralation between Newretail and Chinese Gamer
Assuming the 90 days trading horizon Newretail Co is expected to generate 2.25 times more return on investment than Chinese Gamer. However, Newretail is 2.25 times more volatile than Chinese Gamer International. It trades about 0.03 of its potential returns per unit of risk. Chinese Gamer International is currently generating about 0.01 per unit of risk. If you would invest 2,040 in Newretail Co on August 28, 2024 and sell it today you would earn a total of 530.00 from holding Newretail Co or generate 25.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newretail Co vs. Chinese Gamer International
Performance |
| Timeline |
| Newretail |
| Chinese Gamer Intern |
Newretail and Chinese Gamer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newretail and Chinese Gamer
The main advantage of trading using opposite Newretail and Chinese Gamer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail position performs unexpectedly, Chinese Gamer 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 Chinese Gamer will offset losses from the drop in Chinese Gamer's long position.The idea behind Newretail Co and Chinese Gamer International 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.| Chinese Gamer vs. YuantaP shares Taiwan Electronics | Chinese Gamer vs. YuantaP shares Taiwan Mid Cap | Chinese Gamer vs. Fubon MSCI Taiwan | Chinese Gamer vs. YuantaP shares Taiwan Top |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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