Correlation Between Soft World and Gamania Digital
Can any of the company-specific risk be diversified away by investing in both Soft World 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 Soft World and Gamania Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soft World International and Gamania Digital Entertainment, you can compare the effects of market volatilities on Soft World 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 Soft World with a short position of Gamania Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soft World and Gamania Digital.
Diversification Opportunities for Soft World and Gamania Digital
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Soft and Gamania is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Soft World International 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 Soft World 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 Soft World International 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 Soft World i.e., Soft World and Gamania Digital go up and down completely randomly.
Pair Corralation between Soft World and Gamania Digital
Assuming the 90 days trading horizon Soft World is expected to generate 2.09 times less return on investment than Gamania Digital. But when comparing it to its historical volatility, Soft World International is 1.0 times less risky than Gamania Digital. It trades about 0.03 of its potential returns per unit of risk. Gamania Digital Entertainment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,930 in Gamania Digital Entertainment on November 3, 2024 and sell it today you would earn a total of 670.00 from holding Gamania Digital Entertainment or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soft World International vs. Gamania Digital Entertainment
Performance |
| Timeline |
| Soft World International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Gamania Digital Ente |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Soft World and Gamania Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soft World and Gamania Digital
The main advantage of trading using opposite Soft World and Gamania Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soft World 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 Soft World International 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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