Correlation Between Gaming Realms and Hostelworld Group
Can any of the company-specific risk be diversified away by investing in both Gaming Realms and Hostelworld Group 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 Hostelworld Group 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 Hostelworld Group PLC, you can compare the effects of market volatilities on Gaming Realms and Hostelworld Group 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 Hostelworld Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Hostelworld Group.
Diversification Opportunities for Gaming Realms and Hostelworld Group
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gaming and Hostelworld is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and Hostelworld Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hostelworld Group PLC 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 Hostelworld Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hostelworld Group PLC has no effect on the direction of Gaming Realms i.e., Gaming Realms and Hostelworld Group go up and down completely randomly.
Pair Corralation between Gaming Realms and Hostelworld Group
Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 1.28 times more return on investment than Hostelworld Group. However, Gaming Realms is 1.28 times more volatile than Hostelworld Group PLC. It trades about 0.02 of its potential returns per unit of risk. Hostelworld Group PLC is currently generating about 0.01 per unit of risk. If you would invest 3,500 in Gaming Realms plc on September 12, 2024 and sell it today you would earn a total of 240.00 from holding Gaming Realms plc or generate 6.86% 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. Hostelworld Group PLC
Performance |
| Timeline |
| Gaming Realms plc |
| Hostelworld Group PLC |
Gaming Realms and Hostelworld Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and Hostelworld Group
The main advantage of trading using opposite Gaming Realms and Hostelworld Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms position performs unexpectedly, Hostelworld Group 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 Hostelworld Group will offset losses from the drop in Hostelworld Group's long position.| Gaming Realms vs. National Atomic Co | Gaming Realms vs. OTP Bank Nyrt | Gaming Realms vs. Samsung Electronics Co | Gaming Realms vs. Samsung Electronics Co |
| Hostelworld Group vs. Public Storage | Hostelworld Group vs. Broadcom | Hostelworld Group vs. Gaming Realms plc | Hostelworld Group vs. Broadridge Financial Solutions |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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