Correlation Between REGAL ASIAN and ELECTRONIC ARTS
Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and ELECTRONIC ARTS 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 REGAL ASIAN and ELECTRONIC ARTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and ELECTRONIC ARTS, you can compare the effects of market volatilities on REGAL ASIAN and ELECTRONIC ARTS 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 REGAL ASIAN with a short position of ELECTRONIC ARTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and ELECTRONIC ARTS.
Diversification Opportunities for REGAL ASIAN and ELECTRONIC ARTS
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between REGAL and ELECTRONIC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and ELECTRONIC ARTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTRONIC ARTS and REGAL ASIAN 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 REGAL ASIAN INVESTMENTS are associated (or correlated) with ELECTRONIC ARTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTRONIC ARTS has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and ELECTRONIC ARTS go up and down completely randomly.
Pair Corralation between REGAL ASIAN and ELECTRONIC ARTS
Assuming the 90 days trading horizon REGAL ASIAN is expected to generate 3.81 times less return on investment than ELECTRONIC ARTS. In addition to that, REGAL ASIAN is 1.44 times more volatile than ELECTRONIC ARTS. It trades about 0.03 of its total potential returns per unit of risk. ELECTRONIC ARTS is currently generating about 0.16 per unit of volatility. If you would invest 13,569 in ELECTRONIC ARTS on September 3, 2024 and sell it today you would earn a total of 1,851 from holding ELECTRONIC ARTS or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGAL ASIAN INVESTMENTS vs. ELECTRONIC ARTS
Performance |
| Timeline |
| REGAL ASIAN INVESTMENTS |
| ELECTRONIC ARTS |
REGAL ASIAN and ELECTRONIC ARTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL ASIAN and ELECTRONIC ARTS
The main advantage of trading using opposite REGAL ASIAN and ELECTRONIC ARTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, ELECTRONIC ARTS 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 ELECTRONIC ARTS will offset losses from the drop in ELECTRONIC ARTS's long position.| REGAL ASIAN vs. Ramsay Health Care | REGAL ASIAN vs. Diamondrock Hospitality Co | REGAL ASIAN vs. BW OFFSHORE LTD | REGAL ASIAN vs. AAC TECHNOLOGHLDGADR |
| ELECTRONIC ARTS vs. FEMALE HEALTH | ELECTRONIC ARTS vs. DiamondRock Hospitality | ELECTRONIC ARTS vs. SHIP HEALTHCARE HLDGINC | ELECTRONIC ARTS vs. YOOMA WELLNESS INC |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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