Correlation Between Gaming Realms and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Gaming Realms and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Gaming Realms and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and SMA Solar.
Diversification Opportunities for Gaming Realms and SMA Solar
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gaming and SMA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Gaming Realms i.e., Gaming Realms and SMA Solar go up and down completely randomly.
Pair Corralation between Gaming Realms and SMA Solar
Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 0.67 times more return on investment than SMA Solar. However, Gaming Realms plc is 1.5 times less risky than SMA Solar. It trades about 0.03 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.11 per unit of risk. If you would invest 3,250 in Gaming Realms plc on September 14, 2024 and sell it today you would earn a total of 300.00 from holding Gaming Realms plc or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming Realms plc vs. SMA Solar Technology
Performance |
| Timeline |
| Gaming Realms plc |
| SMA Solar Technology |
Gaming Realms and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and SMA Solar
The main advantage of trading using opposite Gaming Realms and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Gaming Realms vs. Anglesey Mining | Gaming Realms vs. GoldMining | Gaming Realms vs. METALL ZUG AG | Gaming Realms vs. Gamma Communications PLC |
| SMA Solar vs. Europa Metals | SMA Solar vs. Gaming Realms plc | SMA Solar vs. Games Workshop Group | SMA Solar vs. Central Asia Metals |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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