Correlation Between G5 Entertainment and Scandinavian ChemoTech

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Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Scandinavian ChemoTech 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 G5 Entertainment and Scandinavian ChemoTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G5 Entertainment publ and Scandinavian ChemoTech AB, you can compare the effects of market volatilities on G5 Entertainment and Scandinavian ChemoTech 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 G5 Entertainment with a short position of Scandinavian ChemoTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Scandinavian ChemoTech.

Diversification Opportunities for G5 Entertainment and Scandinavian ChemoTech

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between G5EN and Scandinavian is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment publ and Scandinavian ChemoTech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian ChemoTech and G5 Entertainment 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 G5 Entertainment publ are associated (or correlated) with Scandinavian ChemoTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian ChemoTech has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Scandinavian ChemoTech go up and down completely randomly.

Pair Corralation between G5 Entertainment and Scandinavian ChemoTech

Assuming the 90 days trading horizon G5 Entertainment publ is expected to under-perform the Scandinavian ChemoTech. But the stock apears to be less risky and, when comparing its historical volatility, G5 Entertainment publ is 3.06 times less risky than Scandinavian ChemoTech. The stock trades about -0.06 of its potential returns per unit of risk. The Scandinavian ChemoTech AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  463.00  in Scandinavian ChemoTech AB on September 1, 2024 and sell it today you would lose (289.00) from holding Scandinavian ChemoTech AB or give up 62.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

G5 Entertainment publ  vs.  Scandinavian ChemoTech AB

 Performance 
       Timeline  
G5 Entertainment publ 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment publ are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, G5 Entertainment may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Scandinavian ChemoTech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Scandinavian ChemoTech AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Scandinavian ChemoTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

G5 Entertainment and Scandinavian ChemoTech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with G5 Entertainment and Scandinavian ChemoTech

The main advantage of trading using opposite G5 Entertainment and Scandinavian ChemoTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, Scandinavian ChemoTech 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 Scandinavian ChemoTech will offset losses from the drop in Scandinavian ChemoTech's long position.
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The idea behind G5 Entertainment publ and Scandinavian ChemoTech AB 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.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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