Correlation Between G5 Entertainment and MilDef Group
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and MilDef Group 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 MilDef Group 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 MilDef Group AB, you can compare the effects of market volatilities on G5 Entertainment and MilDef Group 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 MilDef Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and MilDef Group.
Diversification Opportunities for G5 Entertainment and MilDef Group
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between G5EN and MilDef is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment publ and MilDef Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MilDef Group AB 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 MilDef Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MilDef Group AB has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and MilDef Group go up and down completely randomly.
Pair Corralation between G5 Entertainment and MilDef Group
Assuming the 90 days trading horizon G5 Entertainment publ is expected to under-perform the MilDef Group. But the stock apears to be less risky and, when comparing its historical volatility, G5 Entertainment publ is 1.47 times less risky than MilDef Group. The stock trades about -0.04 of its potential returns per unit of risk. The MilDef Group AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,714 in MilDef Group AB on September 12, 2024 and sell it today you would earn a total of 4,166 from holding MilDef Group AB or generate 54.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
G5 Entertainment publ vs. MilDef Group AB
Performance |
| Timeline |
| G5 Entertainment publ |
| MilDef Group AB |
G5 Entertainment and MilDef Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and MilDef Group
The main advantage of trading using opposite G5 Entertainment and MilDef Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, MilDef Group 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 MilDef Group will offset losses from the drop in MilDef Group's long position.| G5 Entertainment vs. Stillfront Group AB | G5 Entertainment vs. Paradox Interactive AB | G5 Entertainment vs. Catena Media plc | G5 Entertainment vs. Betsson AB |
| MilDef Group vs. I Tech | MilDef Group vs. Filo Mining Corp | MilDef Group vs. Lundin Mining | MilDef Group vs. Redsense Medical AB |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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