Correlation Between Gaming Factory and ING Bank
Can any of the company-specific risk be diversified away by investing in both Gaming Factory and ING Bank 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 Factory and ING Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Factory SA and ING Bank lski, you can compare the effects of market volatilities on Gaming Factory and ING Bank 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 Factory with a short position of ING Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Factory and ING Bank.
Diversification Opportunities for Gaming Factory and ING Bank
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gaming and ING is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Factory SA and ING Bank lski in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Bank lski and Gaming Factory 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 Factory SA are associated (or correlated) with ING Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Bank lski has no effect on the direction of Gaming Factory i.e., Gaming Factory and ING Bank go up and down completely randomly.
Pair Corralation between Gaming Factory and ING Bank
Assuming the 90 days trading horizon Gaming Factory SA is expected to under-perform the ING Bank. In addition to that, Gaming Factory is 2.51 times more volatile than ING Bank lski. It trades about -0.07 of its total potential returns per unit of risk. ING Bank lski is currently generating about -0.11 per unit of volatility. If you would invest 24,850 in ING Bank lski on September 1, 2024 and sell it today you would lose (1,200) from holding ING Bank lski or give up 4.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming Factory SA vs. ING Bank lski
Performance |
| Timeline |
| Gaming Factory SA |
| ING Bank lski |
Gaming Factory and ING Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Factory and ING Bank
The main advantage of trading using opposite Gaming Factory and ING Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Factory position performs unexpectedly, ING Bank 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 ING Bank will offset losses from the drop in ING Bank's long position.The idea behind Gaming Factory SA and ING Bank lski 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.| ING Bank vs. Enter Air SA | ING Bank vs. Varsav Game Studios | ING Bank vs. Globe Trade Centre | ING Bank vs. Igoria Trade SA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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