Correlation Between GAMING FAC and ALEFARM BREWING
Can any of the company-specific risk be diversified away by investing in both GAMING FAC and ALEFARM BREWING 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 GAMING FAC and ALEFARM BREWING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMING FAC SA and ALEFARM BREWING DK 05, you can compare the effects of market volatilities on GAMING FAC and ALEFARM BREWING 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 GAMING FAC with a short position of ALEFARM BREWING. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMING FAC and ALEFARM BREWING.
Diversification Opportunities for GAMING FAC and ALEFARM BREWING
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GAMING and ALEFARM is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and ALEFARM BREWING DK 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEFARM BREWING DK and GAMING FAC 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 GAMING FAC SA are associated (or correlated) with ALEFARM BREWING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEFARM BREWING DK has no effect on the direction of GAMING FAC i.e., GAMING FAC and ALEFARM BREWING go up and down completely randomly.
Pair Corralation between GAMING FAC and ALEFARM BREWING
Assuming the 90 days horizon GAMING FAC SA is expected to generate 0.82 times more return on investment than ALEFARM BREWING. However, GAMING FAC SA is 1.22 times less risky than ALEFARM BREWING. It trades about 0.2 of its potential returns per unit of risk. ALEFARM BREWING DK 05 is currently generating about 0.1 per unit of risk. If you would invest 160.00 in GAMING FAC SA on October 30, 2024 and sell it today you would earn a total of 18.00 from holding GAMING FAC SA or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMING FAC SA vs. ALEFARM BREWING DK 05
Performance |
| Timeline |
| GAMING FAC SA |
| ALEFARM BREWING DK |
GAMING FAC and ALEFARM BREWING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMING FAC and ALEFARM BREWING
The main advantage of trading using opposite GAMING FAC and ALEFARM BREWING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMING FAC position performs unexpectedly, ALEFARM BREWING 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 ALEFARM BREWING will offset losses from the drop in ALEFARM BREWING's long position.| GAMING FAC vs. Marie Brizard Wine | GAMING FAC vs. Axfood AB | GAMING FAC vs. Japan Tobacco | GAMING FAC vs. BRIT AMER TOBACCO |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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