Correlation Between Embracer Group and Square Enix
Can any of the company-specific risk be diversified away by investing in both Embracer Group and Square Enix 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 Square Enix 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 Square Enix Holdings, you can compare the effects of market volatilities on Embracer Group and Square Enix 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 Square Enix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embracer Group and Square Enix.
Diversification Opportunities for Embracer Group and Square Enix
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Embracer and Square is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Embracer Group AB and Square Enix Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Square Enix Holdings 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 Square Enix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Square Enix Holdings has no effect on the direction of Embracer Group i.e., Embracer Group and Square Enix go up and down completely randomly.
Pair Corralation between Embracer Group and Square Enix
Assuming the 90 days horizon Embracer Group AB is expected to under-perform the Square Enix. In addition to that, Embracer Group is 1.79 times more volatile than Square Enix Holdings. It trades about -0.01 of its total potential returns per unit of risk. Square Enix Holdings is currently generating about 0.0 per unit of volatility. If you would invest 2,218 in Square Enix Holdings on August 28, 2024 and sell it today you would lose (219.00) from holding Square Enix Holdings or give up 9.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.98% |
| Values | Daily Returns |
Embracer Group AB vs. Square Enix Holdings
Performance |
| Timeline |
| Embracer Group AB |
| Square Enix Holdings |
Embracer Group and Square Enix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embracer Group and Square Enix
The main advantage of trading using opposite Embracer Group and Square Enix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embracer Group position performs unexpectedly, Square Enix 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 Square Enix will offset losses from the drop in Square Enix'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 |
| Square Enix vs. GDEV Inc | Square Enix vs. Doubledown Interactive Co | Square Enix vs. Playstudios | Square Enix 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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