Correlation Between GDEV and IGG
Can any of the company-specific risk be diversified away by investing in both GDEV and IGG 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 GDEV and IGG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GDEV Inc and IGG Inc, you can compare the effects of market volatilities on GDEV and IGG 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 GDEV with a short position of IGG. Check out your portfolio center. Please also check ongoing floating volatility patterns of GDEV and IGG.
Diversification Opportunities for GDEV and IGG
Poor diversification
The 3 months correlation between GDEV and IGG is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GDEV Inc and IGG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGG Inc and GDEV 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 GDEV Inc are associated (or correlated) with IGG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGG Inc has no effect on the direction of GDEV i.e., GDEV and IGG go up and down completely randomly.
Pair Corralation between GDEV and IGG
Given the investment horizon of 90 days GDEV Inc is expected to under-perform the IGG. But the stock apears to be less risky and, when comparing its historical volatility, GDEV Inc is 2.02 times less risky than IGG. The stock trades about 0.0 of its potential returns per unit of risk. The IGG Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 34.00 in IGG Inc on August 28, 2024 and sell it today you would earn a total of 14.00 from holding IGG Inc or generate 41.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.95% |
| Values | Daily Returns |
GDEV Inc vs. IGG Inc
Performance |
| Timeline |
| GDEV Inc |
| IGG Inc |
GDEV and IGG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GDEV and IGG
The main advantage of trading using opposite GDEV and IGG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDEV position performs unexpectedly, IGG 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 IGG will offset losses from the drop in IGG's long position.The idea behind GDEV Inc and IGG Inc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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