Correlation Between International Games and Gamania Digital
Can any of the company-specific risk be diversified away by investing in both International Games and Gamania Digital 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 International Games and Gamania Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Games System and Gamania Digital Entertainment, you can compare the effects of market volatilities on International Games and Gamania Digital 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 International Games with a short position of Gamania Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Games and Gamania Digital.
Diversification Opportunities for International Games and Gamania Digital
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between International and Gamania is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding International Games System and Gamania Digital Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamania Digital Ente and International Games 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 International Games System are associated (or correlated) with Gamania Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamania Digital Ente has no effect on the direction of International Games i.e., International Games and Gamania Digital go up and down completely randomly.
Pair Corralation between International Games and Gamania Digital
Assuming the 90 days trading horizon International Games System is expected to generate 1.23 times more return on investment than Gamania Digital. However, International Games is 1.23 times more volatile than Gamania Digital Entertainment. It trades about -0.05 of its potential returns per unit of risk. Gamania Digital Entertainment is currently generating about -0.1 per unit of risk. If you would invest 96,300 in International Games System on November 3, 2024 and sell it today you would lose (1,700) from holding International Games System or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Games System vs. Gamania Digital Entertainment
Performance |
| Timeline |
| International Games |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Gamania Digital Ente |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
International Games and Gamania Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Games and Gamania Digital
The main advantage of trading using opposite International Games and Gamania Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Games position performs unexpectedly, Gamania Digital 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 Gamania Digital will offset losses from the drop in Gamania Digital's long position.The idea behind International Games System and Gamania Digital Entertainment 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.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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