Correlation Between Esports Entertainment and G Medical
Can any of the company-specific risk be diversified away by investing in both Esports Entertainment and G Medical 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 Esports Entertainment and G Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esports Entertainment Group and G Medical Innovations, you can compare the effects of market volatilities on Esports Entertainment and G Medical 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 Esports Entertainment with a short position of G Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esports Entertainment and G Medical.
Diversification Opportunities for Esports Entertainment and G Medical
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Esports and GMVDW is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Esports Entertainment Group and G Medical Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Medical Innovations and Esports 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 Esports Entertainment Group are associated (or correlated) with G Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Medical Innovations has no effect on the direction of Esports Entertainment i.e., Esports Entertainment and G Medical go up and down completely randomly.
Pair Corralation between Esports Entertainment and G Medical
Assuming the 90 days horizon Esports Entertainment is expected to generate 2.43 times less return on investment than G Medical. But when comparing it to its historical volatility, Esports Entertainment Group is 2.35 times less risky than G Medical. It trades about 0.12 of its potential returns per unit of risk. G Medical Innovations is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 171.00 in G Medical Innovations on September 2, 2024 and sell it today you would earn a total of 230.00 from holding G Medical Innovations or generate 134.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.48% |
| Values | Daily Returns |
Esports Entertainment Group vs. G Medical Innovations
Performance |
| Timeline |
| Esports Entertainment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| G Medical Innovations |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Esports Entertainment and G Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esports Entertainment and G Medical
The main advantage of trading using opposite Esports Entertainment and G Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esports Entertainment position performs unexpectedly, G Medical 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 G Medical will offset losses from the drop in G Medical's long position.The idea behind Esports Entertainment Group and G Medical Innovations 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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