Correlation Between VR Factory and MW Trade
Can any of the company-specific risk be diversified away by investing in both VR Factory and MW Trade 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 VR Factory and MW Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VR Factory Games and MW Trade SA, you can compare the effects of market volatilities on VR Factory and MW Trade 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 VR Factory with a short position of MW Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of VR Factory and MW Trade.
Diversification Opportunities for VR Factory and MW Trade
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VRF and MWT is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding VR Factory Games and MW Trade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MW Trade SA and VR Factory 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 VR Factory Games are associated (or correlated) with MW Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MW Trade SA has no effect on the direction of VR Factory i.e., VR Factory and MW Trade go up and down completely randomly.
Pair Corralation between VR Factory and MW Trade
Assuming the 90 days trading horizon VR Factory Games is expected to generate 3.13 times more return on investment than MW Trade. However, VR Factory is 3.13 times more volatile than MW Trade SA. It trades about -0.02 of its potential returns per unit of risk. MW Trade SA is currently generating about -0.46 per unit of risk. If you would invest 34.00 in VR Factory Games on September 4, 2024 and sell it today you would lose (2.00) from holding VR Factory Games or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
VR Factory Games vs. MW Trade SA
Performance |
| Timeline |
| VR Factory Games |
| MW Trade SA |
VR Factory and MW Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VR Factory and MW Trade
The main advantage of trading using opposite VR Factory and MW Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VR Factory position performs unexpectedly, MW Trade 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 MW Trade will offset losses from the drop in MW Trade's long position.| VR Factory vs. MW Trade SA | VR Factory vs. PZ Cormay SA | VR Factory vs. Gaming Factory SA | VR Factory vs. Immobile |
| MW Trade vs. X Trade Brokers | MW Trade vs. SOFTWARE MANSION SPOLKA | MW Trade vs. Quantum Software SA | MW Trade vs. Road Studio SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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