Correlation Between Innovative Food and Galaxy Gaming
Can any of the company-specific risk be diversified away by investing in both Innovative Food and Galaxy Gaming 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 Innovative Food and Galaxy Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Food Hldg and Galaxy Gaming, you can compare the effects of market volatilities on Innovative Food and Galaxy Gaming 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 Innovative Food with a short position of Galaxy Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Food and Galaxy Gaming.
Diversification Opportunities for Innovative Food and Galaxy Gaming
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovative and Galaxy is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Food Hldg and Galaxy Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Gaming and Innovative Food 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 Innovative Food Hldg are associated (or correlated) with Galaxy Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Gaming has no effect on the direction of Innovative Food i.e., Innovative Food and Galaxy Gaming go up and down completely randomly.
Pair Corralation between Innovative Food and Galaxy Gaming
Given the investment horizon of 90 days Innovative Food Hldg is expected to generate 3.52 times more return on investment than Galaxy Gaming. However, Innovative Food is 3.52 times more volatile than Galaxy Gaming. It trades about 0.08 of its potential returns per unit of risk. Galaxy Gaming is currently generating about 0.15 per unit of risk. If you would invest 195.00 in Innovative Food Hldg on December 11, 2024 and sell it today you would earn a total of 14.00 from holding Innovative Food Hldg or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Food Hldg vs. Galaxy Gaming
Performance |
| Timeline |
| Innovative Food Hldg |
| Galaxy Gaming |
Innovative Food and Galaxy Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Food and Galaxy Gaming
The main advantage of trading using opposite Innovative Food and Galaxy Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Food position performs unexpectedly, Galaxy Gaming 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 Galaxy Gaming will offset losses from the drop in Galaxy Gaming's long position.| Innovative Food vs. Organto Foods | ||
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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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