Correlation Between Gaming Realms and Air Products
Can any of the company-specific risk be diversified away by investing in both Gaming Realms and Air Products 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 Realms and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Realms plc and Air Products Chemicals, you can compare the effects of market volatilities on Gaming Realms and Air Products 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 Realms with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Air Products.
Diversification Opportunities for Gaming Realms and Air Products
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gaming and Air is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Gaming Realms 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 Realms plc are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Gaming Realms i.e., Gaming Realms and Air Products go up and down completely randomly.
Pair Corralation between Gaming Realms and Air Products
Assuming the 90 days trading horizon Gaming Realms is expected to generate 31.44 times less return on investment than Air Products. But when comparing it to its historical volatility, Gaming Realms plc is 2.8 times less risky than Air Products. It trades about 0.0 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 20,893 in Air Products Chemicals on November 3, 2024 and sell it today you would earn a total of 12,687 from holding Air Products Chemicals or generate 60.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Gaming Realms plc vs. Air Products Chemicals
Performance |
| Timeline |
| Gaming Realms plc |
| Air Products Chemicals |
Gaming Realms and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and Air Products
The main advantage of trading using opposite Gaming Realms and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Gaming Realms vs. National Beverage Corp | Gaming Realms vs. Molson Coors Beverage | Gaming Realms vs. SBM Offshore NV | Gaming Realms vs. Southwest Airlines Co |
| Air Products vs. National Beverage Corp | Air Products vs. Associated British Foods | Air Products vs. CAP LEASE AVIATION | Air Products vs. Geely Automobile Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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