Correlation Between Light Wonder and Gan
Can any of the company-specific risk be diversified away by investing in both Light Wonder and Gan 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 Light Wonder and Gan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Wonder and Gan, you can compare the effects of market volatilities on Light Wonder and Gan 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 Light Wonder with a short position of Gan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Gan.
Diversification Opportunities for Light Wonder and Gan
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Light and Gan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Gan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan and Light Wonder 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 Light Wonder are associated (or correlated) with Gan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan has no effect on the direction of Light Wonder i.e., Light Wonder and Gan go up and down completely randomly.
Pair Corralation between Light Wonder and Gan
Considering the 90-day investment horizon Light Wonder is expected to generate 5.62 times less return on investment than Gan. In addition to that, Light Wonder is 1.57 times more volatile than Gan. It trades about 0.02 of its total potential returns per unit of risk. Gan is currently generating about 0.15 per unit of volatility. If you would invest 137.00 in Gan on August 25, 2024 and sell it today you would earn a total of 47.00 from holding Gan or generate 34.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Light Wonder vs. Gan
Performance |
| Timeline |
| Light Wonder |
| Gan |
Light Wonder and Gan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Wonder and Gan
The main advantage of trading using opposite Light Wonder and Gan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder position performs unexpectedly, Gan 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 Gan will offset losses from the drop in Gan's long position.The idea behind Light Wonder and Gan pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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