Correlation Between Gaming Realms and Induction Healthcare
Can any of the company-specific risk be diversified away by investing in both Gaming Realms and Induction Healthcare 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 Induction Healthcare 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 Induction Healthcare Group, you can compare the effects of market volatilities on Gaming Realms and Induction Healthcare 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 Induction Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Induction Healthcare.
Diversification Opportunities for Gaming Realms and Induction Healthcare
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gaming and Induction is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare 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 Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Gaming Realms i.e., Gaming Realms and Induction Healthcare go up and down completely randomly.
Pair Corralation between Gaming Realms and Induction Healthcare
Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 0.63 times more return on investment than Induction Healthcare. However, Gaming Realms plc is 1.59 times less risky than Induction Healthcare. It trades about 0.04 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about -0.04 per unit of risk. If you would invest 2,500 in Gaming Realms plc on August 30, 2024 and sell it today you would earn a total of 1,200 from holding Gaming Realms plc or generate 48.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming Realms plc vs. Induction Healthcare Group
Performance |
| Timeline |
| Gaming Realms plc |
| Induction Healthcare |
Gaming Realms and Induction Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and Induction Healthcare
The main advantage of trading using opposite Gaming Realms and Induction Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms position performs unexpectedly, Induction Healthcare 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 Induction Healthcare will offset losses from the drop in Induction Healthcare's long position.| Gaming Realms vs. Ondine Biomedical | Gaming Realms vs. Europa Metals | Gaming Realms vs. Lendinvest PLC | Gaming Realms vs. Neometals |
| Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Hyundai Motor | Induction Healthcare vs. Toyota Motor Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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