Correlation Between China Mobile and GameSparcs

Can any of the company-specific risk be diversified away by investing in both China Mobile and GameSparcs 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 China Mobile and GameSparcs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Mobile and GameSparcs Co, you can compare the effects of market volatilities on China Mobile and GameSparcs 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 China Mobile with a short position of GameSparcs. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Mobile and GameSparcs.

Diversification Opportunities for China Mobile and GameSparcs

0.31

Correlation Coefficient

China Mobile  GameSparcs

Weak diversification

The 3 months correlation between China and GameSparcs is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding China Mobile and GameSparcs Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameSparcs and China Mobile 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 China Mobile are associated (or correlated) with GameSparcs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameSparcs has no effect on the direction of China Mobile i.e., China Mobile and GameSparcs go up and down completely randomly.

Pair Corralation between China Mobile and GameSparcs

Assuming the 90 days trading horizon China Mobile is expected to generate 0.55 times more return on investment than GameSparcs. However, China Mobile is 1.81 times less risky than GameSparcs. It trades about 0.05 of its potential returns per unit of risk. GameSparcs Co is currently generating about -0.01 per unit of risk. If you would invest  1,336  in China Mobile on December 25, 2024 and sell it today you would earn a total of  34.00  from holding China Mobile or generate 2.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

China Mobile  vs.  GameSparcs Co

China Mobile

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Mobile are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, China Mobile is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

GameSparcs

Risk-Adjusted Performance

Very Weak

Over the last 90 days GameSparcs Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, GameSparcs is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with China Mobile and GameSparcs

The main advantage of trading using opposite China Mobile and GameSparcs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Mobile position performs unexpectedly, GameSparcs 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 GameSparcs will offset losses from the drop in GameSparcs' long position.

The idea behind China Mobile and GameSparcs Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.