Correlation Between Gaming Factory and X Trade
Can any of the company-specific risk be diversified away by investing in both Gaming Factory and X Trade 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 X Trade 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 X Trade Brokers, you can compare the effects of market volatilities on Gaming Factory and X Trade 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 X Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Factory and X Trade.
Diversification Opportunities for Gaming Factory and X Trade
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gaming and XTB is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Factory SA and X Trade Brokers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Trade Brokers 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 X Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Trade Brokers has no effect on the direction of Gaming Factory i.e., Gaming Factory and X Trade go up and down completely randomly.
Pair Corralation between Gaming Factory and X Trade
Assuming the 90 days trading horizon Gaming Factory SA is expected to under-perform the X Trade. In addition to that, Gaming Factory is 1.61 times more volatile than X Trade Brokers. It trades about -0.11 of its total potential returns per unit of risk. X Trade Brokers is currently generating about 0.05 per unit of volatility. If you would invest 6,430 in X Trade Brokers on September 2, 2024 and sell it today you would earn a total of 652.00 from holding X Trade Brokers or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming Factory SA vs. X Trade Brokers
Performance |
| Timeline |
| Gaming Factory SA |
| X Trade Brokers |
Gaming Factory and X Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Factory and X Trade
The main advantage of trading using opposite Gaming Factory and X Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Factory position performs unexpectedly, X Trade 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 X Trade will offset losses from the drop in X Trade's long position.The idea behind Gaming Factory SA and X Trade Brokers 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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