Correlation Between MW Trade and VR Factory
Can any of the company-specific risk be diversified away by investing in both MW Trade and VR Factory 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 MW Trade and VR Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MW Trade SA and VR Factory Games, you can compare the effects of market volatilities on MW Trade and VR Factory 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 MW Trade with a short position of VR Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of MW Trade and VR Factory.
Diversification Opportunities for MW Trade and VR Factory
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MWT and VRF is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MW Trade SA and VR Factory Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VR Factory Games and MW Trade 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 MW Trade SA are associated (or correlated) with VR Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VR Factory Games has no effect on the direction of MW Trade i.e., MW Trade and VR Factory go up and down completely randomly.
Pair Corralation between MW Trade and VR Factory
Assuming the 90 days trading horizon MW Trade SA is expected to under-perform the VR Factory. But the stock apears to be less risky and, when comparing its historical volatility, MW Trade SA is 1.47 times less risky than VR Factory. The stock trades about -0.25 of its potential returns per unit of risk. The VR Factory Games is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 33.00 in VR Factory Games on September 12, 2024 and sell it today you would earn a total of 1.00 from holding VR Factory Games or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
MW Trade SA vs. VR Factory Games
Performance |
| Timeline |
| MW Trade SA |
| VR Factory Games |
MW Trade and VR Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MW Trade and VR Factory
The main advantage of trading using opposite MW Trade and VR Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MW Trade position performs unexpectedly, VR Factory 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 VR Factory will offset losses from the drop in VR Factory's long position.| MW Trade vs. Kruk SA | MW Trade vs. Asseco Business Solutions | MW Trade vs. Detalion Games SA | MW Trade vs. Asseco South Eastern |
| VR Factory vs. PLAYWAY SA | VR Factory vs. Cloud Technologies SA | VR Factory vs. Kool2play SA | VR Factory vs. Centrum Finansowe Banku |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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