Correlation Between New Tech and Baked Games
Can any of the company-specific risk be diversified away by investing in both New Tech and Baked Games 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 New Tech and Baked Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Tech Venture and Baked Games SA, you can compare the effects of market volatilities on New Tech and Baked Games 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 New Tech with a short position of Baked Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and Baked Games.
Diversification Opportunities for New Tech and Baked Games
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and Baked is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Venture and Baked Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baked Games SA and New Tech 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 New Tech Venture are associated (or correlated) with Baked Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baked Games SA has no effect on the direction of New Tech i.e., New Tech and Baked Games go up and down completely randomly.
Pair Corralation between New Tech and Baked Games
Assuming the 90 days trading horizon New Tech Venture is expected to generate 1.3 times more return on investment than Baked Games. However, New Tech is 1.3 times more volatile than Baked Games SA. It trades about -0.13 of its potential returns per unit of risk. Baked Games SA is currently generating about -0.36 per unit of risk. If you would invest 13.00 in New Tech Venture on September 13, 2024 and sell it today you would lose (1.00) from holding New Tech Venture or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
New Tech Venture vs. Baked Games SA
Performance |
| Timeline |
| New Tech Venture |
| Baked Games SA |
New Tech and Baked Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Tech and Baked Games
The main advantage of trading using opposite New Tech and Baked Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Tech position performs unexpectedly, Baked Games 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 Baked Games will offset losses from the drop in Baked Games' long position.| New Tech vs. Kool2play SA | New Tech vs. Alior Bank SA | New Tech vs. Santander Bank Polska | New Tech vs. Quantum Software SA |
| Baked Games vs. LSI Software SA | Baked Games vs. Mlk Foods Public | Baked Games vs. Immobile | Baked Games vs. GreenX Metals |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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