Correlation Between Gaming Realms and Zegona Communications
Can any of the company-specific risk be diversified away by investing in both Gaming Realms and Zegona Communications 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 Zegona Communications 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 Zegona Communications Plc, you can compare the effects of market volatilities on Gaming Realms and Zegona Communications 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 Zegona Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Zegona Communications.
Diversification Opportunities for Gaming Realms and Zegona Communications
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gaming and Zegona is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications 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 Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of Gaming Realms i.e., Gaming Realms and Zegona Communications go up and down completely randomly.
Pair Corralation between Gaming Realms and Zegona Communications
Assuming the 90 days trading horizon Gaming Realms plc is expected to under-perform the Zegona Communications. But the stock apears to be less risky and, when comparing its historical volatility, Gaming Realms plc is 1.81 times less risky than Zegona Communications. The stock trades about -0.13 of its potential returns per unit of risk. The Zegona Communications Plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 30,600 in Zegona Communications Plc on September 12, 2024 and sell it today you would earn a total of 1,800 from holding Zegona Communications Plc or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming Realms plc vs. Zegona Communications Plc
Performance |
| Timeline |
| Gaming Realms plc |
| Zegona Communications Plc |
Gaming Realms and Zegona Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and Zegona Communications
The main advantage of trading using opposite Gaming Realms and Zegona Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms position performs unexpectedly, Zegona Communications 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 Zegona Communications will offset losses from the drop in Zegona Communications' 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 |
| Zegona Communications vs. Catalyst Media Group | Zegona Communications vs. CATLIN GROUP | Zegona Communications vs. Tamburi Investment Partners | Zegona Communications vs. Magnora ASA |
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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