Correlation Between Embracer Group and GDEV
Can any of the company-specific risk be diversified away by investing in both Embracer Group and GDEV 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 Embracer Group and GDEV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embracer Group AB and GDEV Inc, you can compare the effects of market volatilities on Embracer Group and GDEV 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 Embracer Group with a short position of GDEV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embracer Group and GDEV.
Diversification Opportunities for Embracer Group and GDEV
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Embracer and GDEV is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Embracer Group AB and GDEV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDEV Inc and Embracer Group 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 Embracer Group AB are associated (or correlated) with GDEV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDEV Inc has no effect on the direction of Embracer Group i.e., Embracer Group and GDEV go up and down completely randomly.
Pair Corralation between Embracer Group and GDEV
Assuming the 90 days horizon Embracer Group AB is expected to generate 0.39 times more return on investment than GDEV. However, Embracer Group AB is 2.58 times less risky than GDEV. It trades about -0.29 of its potential returns per unit of risk. GDEV Inc is currently generating about -0.32 per unit of risk. If you would invest 284.00 in Embracer Group AB on August 28, 2024 and sell it today you would lose (39.00) from holding Embracer Group AB or give up 13.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embracer Group AB vs. GDEV Inc
Performance |
| Timeline |
| Embracer Group AB |
| GDEV Inc |
Embracer Group and GDEV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embracer Group and GDEV
The main advantage of trading using opposite Embracer Group and GDEV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embracer Group position performs unexpectedly, GDEV 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 GDEV will offset losses from the drop in GDEV's long position.| Embracer Group vs. Square Enix Holdings | Embracer Group vs. Capcom Co | Embracer Group vs. CD Projekt SA | Embracer Group vs. Sega Sammy Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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