Correlation Between Baker Steel and G5 Entertainment
Can any of the company-specific risk be diversified away by investing in both Baker Steel and G5 Entertainment 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 Baker Steel and G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Steel Resources and G5 Entertainment AB, you can compare the effects of market volatilities on Baker Steel and G5 Entertainment 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 Baker Steel with a short position of G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Steel and G5 Entertainment.
Diversification Opportunities for Baker Steel and G5 Entertainment
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baker and 0QUS is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and G5 Entertainment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment and Baker Steel 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 Baker Steel Resources are associated (or correlated) with G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment has no effect on the direction of Baker Steel i.e., Baker Steel and G5 Entertainment go up and down completely randomly.
Pair Corralation between Baker Steel and G5 Entertainment
Assuming the 90 days trading horizon Baker Steel Resources is expected to generate 0.96 times more return on investment than G5 Entertainment. However, Baker Steel Resources is 1.04 times less risky than G5 Entertainment. It trades about 0.27 of its potential returns per unit of risk. G5 Entertainment AB is currently generating about 0.01 per unit of risk. If you would invest 5,150 in Baker Steel Resources on September 12, 2024 and sell it today you would earn a total of 650.00 from holding Baker Steel Resources or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Steel Resources vs. G5 Entertainment AB
Performance |
| Timeline |
| Baker Steel Resources |
| G5 Entertainment |
Baker Steel and G5 Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Steel and G5 Entertainment
The main advantage of trading using opposite Baker Steel and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.| Baker Steel vs. Samsung Electronics Co | Baker Steel vs. Samsung Electronics Co | Baker Steel vs. Hyundai Motor | Baker Steel vs. Toyota Motor Corp |
| G5 Entertainment vs. Tatton Asset Management | G5 Entertainment vs. Melia Hotels | G5 Entertainment vs. Litigation Capital Management | G5 Entertainment vs. Host Hotels Resorts |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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