Correlation Between Sparebanken Vest and Gaming Realms

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

By analyzing existing cross correlation between Sparebanken Vest and Gaming Realms plc, you can compare the effects of market volatilities on Sparebanken Vest and Gaming Realms 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 Sparebanken Vest with a short position of Gaming Realms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Vest and Gaming Realms.

Diversification Opportunities for Sparebanken Vest and Gaming Realms

0.09

Correlation Coefficient

Sparebanken Vest  Gaming Realms

Significant diversification

The 3 months correlation between Sparebanken and Gaming is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Vest and Gaming Realms plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Realms plc and Sparebanken Vest 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 Sparebanken Vest are associated (or correlated) with Gaming Realms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Realms plc has no effect on the direction of Sparebanken Vest i.e., Sparebanken Vest and Gaming Realms go up and down completely randomly.

Pair Corralation between Sparebanken Vest and Gaming Realms

Assuming the 90 days trading horizon Sparebanken Vest is expected to generate 2.03 times less return on investment than Gaming Realms. But when comparing it to its historical volatility, Sparebanken Vest is 9.76 times less risky than Gaming Realms. It trades about 0.55 of its potential returns per unit of risk. Gaming Realms plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,540  in Gaming Realms plc on October 26, 2024 and sell it today you would earn a total of  180.00  from holding Gaming Realms plc or generate 5.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.95%
Values	Daily Returns

Sparebanken Vest  vs.  Gaming Realms plc

Sparebanken Vest

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Vest are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sparebanken Vest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gaming Realms plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming Realms plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Gaming Realms exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparebanken Vest and Gaming Realms

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

The idea behind Sparebanken Vest and Gaming Realms plc 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.