Correlation Between NGG and VR Factory
Can any of the company-specific risk be diversified away by investing in both NGG 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 NGG and VR Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NGG and VR Factory Games, you can compare the effects of market volatilities on NGG 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 NGG with a short position of VR Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGG and VR Factory.
Diversification Opportunities for NGG and VR Factory
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NGG and VRF is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NGG 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 NGG 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 NGG 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 NGG i.e., NGG and VR Factory go up and down completely randomly.
Pair Corralation between NGG and VR Factory
Assuming the 90 days trading horizon NGG is expected to generate 0.76 times more return on investment than VR Factory. However, NGG is 1.31 times less risky than VR Factory. It trades about -0.02 of its potential returns per unit of risk. VR Factory Games is currently generating about -0.06 per unit of risk. If you would invest 3.42 in NGG on August 30, 2024 and sell it today you would lose (0.14) from holding NGG or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NGG vs. VR Factory Games
Performance |
| Timeline |
| NGG |
| VR Factory Games |
NGG and VR Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGG and VR Factory
The main advantage of trading using opposite NGG and VR Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGG 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.| NGG vs. Asseco Business Solutions | NGG vs. Detalion Games SA | NGG vs. CFI Holding SA | NGG vs. HM Inwest SA |
| VR Factory vs. NGG | VR Factory vs. Asseco Business Solutions | VR Factory vs. Detalion Games SA | VR Factory vs. CFI Holding 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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