Correlation Between M Food and Gamedust
Can any of the company-specific risk be diversified away by investing in both M Food and Gamedust 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 M Food and Gamedust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Food SA and Gamedust SA, you can compare the effects of market volatilities on M Food and Gamedust 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 M Food with a short position of Gamedust. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Food and Gamedust.
Diversification Opportunities for M Food and Gamedust
Very weak diversification
The 3 months correlation between MFD and Gamedust is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding M Food SA and Gamedust SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamedust SA and M 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 M Food SA are associated (or correlated) with Gamedust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamedust SA has no effect on the direction of M Food i.e., M Food and Gamedust go up and down completely randomly.
Pair Corralation between M Food and Gamedust
Assuming the 90 days trading horizon M Food SA is expected to generate 1.52 times more return on investment than Gamedust. However, M Food is 1.52 times more volatile than Gamedust SA. It trades about 0.12 of its potential returns per unit of risk. Gamedust SA is currently generating about -0.23 per unit of risk. If you would invest 81.00 in M Food SA on November 4, 2024 and sell it today you would earn a total of 8.00 from holding M Food SA or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
M Food SA vs. Gamedust SA
Performance |
| Timeline |
| M Food SA |
| Gamedust SA |
M Food and Gamedust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Food and Gamedust
The main advantage of trading using opposite M Food and Gamedust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Food position performs unexpectedly, Gamedust 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 Gamedust will offset losses from the drop in Gamedust's long position.| M Food vs. Asseco Business Solutions | M Food vs. Detalion Games SA | M Food vs. Movie Games SA | M Food vs. Altustfi |
| Gamedust vs. NGG | Gamedust vs. Asseco Business Solutions | Gamedust vs. Detalion Games SA | Gamedust vs. Movie Games SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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