Correlation Between UF Games and True Games
Can any of the company-specific risk be diversified away by investing in both UF Games and True 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 UF Games and True Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UF Games SA and True Games Syndicate, you can compare the effects of market volatilities on UF Games and True 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 UF Games with a short position of True Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of UF Games and True Games.
Diversification Opportunities for UF Games and True Games
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UFG and True is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding UF Games SA and True Games Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True Games Syndicate and UF Games 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 UF Games SA are associated (or correlated) with True Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True Games Syndicate has no effect on the direction of UF Games i.e., UF Games and True Games go up and down completely randomly.
Pair Corralation between UF Games and True Games
Assuming the 90 days trading horizon UF Games SA is expected to under-perform the True Games. But the stock apears to be less risky and, when comparing its historical volatility, UF Games SA is 2.27 times less risky than True Games. The stock trades about -0.08 of its potential returns per unit of risk. The True Games Syndicate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 32.00 in True Games Syndicate on August 27, 2024 and sell it today you would earn a total of 16.00 from holding True Games Syndicate or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.2% |
| Values | Daily Returns |
UF Games SA vs. True Games Syndicate
Performance |
| Timeline |
| UF Games SA |
| True Games Syndicate |
UF Games and True Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UF Games and True Games
The main advantage of trading using opposite UF Games and True Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UF Games position performs unexpectedly, True 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 True Games will offset losses from the drop in True Games' long position.| UF Games vs. Banco Santander SA | UF Games vs. UniCredit SpA | UF Games vs. CEZ as | UF Games vs. Polski Koncern Naftowy |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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