Correlation Between Square Enix and Embracer Group
Can any of the company-specific risk be diversified away by investing in both Square Enix and Embracer Group 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 Square Enix and Embracer Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Square Enix Holdings and Embracer Group AB, you can compare the effects of market volatilities on Square Enix and Embracer Group 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 Square Enix with a short position of Embracer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Square Enix and Embracer Group.
Diversification Opportunities for Square Enix and Embracer Group
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Square and Embracer is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Square Enix Holdings and Embracer Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embracer Group AB and Square Enix 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 Square Enix Holdings are associated (or correlated) with Embracer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embracer Group AB has no effect on the direction of Square Enix i.e., Square Enix and Embracer Group go up and down completely randomly.
Pair Corralation between Square Enix and Embracer Group
Assuming the 90 days horizon Square Enix Holdings is expected to generate 1.72 times more return on investment than Embracer Group. However, Square Enix is 1.72 times more volatile than Embracer Group AB. It trades about 0.03 of its potential returns per unit of risk. Embracer Group AB is currently generating about -0.25 per unit of risk. If you would invest 1,930 in Square Enix Holdings on August 24, 2024 and sell it today you would earn a total of 11.00 from holding Square Enix Holdings or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Square Enix Holdings vs. Embracer Group AB
Performance |
| Timeline |
| Square Enix Holdings |
| Embracer Group AB |
Square Enix and Embracer Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Square Enix and Embracer Group
The main advantage of trading using opposite Square Enix and Embracer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Square Enix position performs unexpectedly, Embracer Group 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 Embracer Group will offset losses from the drop in Embracer Group's long position.| Square Enix vs. Sega Sammy Holdings | Square Enix vs. Capcom Co Ltd | Square Enix vs. Capcom Co | Square Enix vs. CD Projekt SA |
| Embracer Group vs. GDEV Inc | Embracer Group vs. Doubledown Interactive Co | Embracer Group vs. Playstudios | Embracer Group vs. SohuCom |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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