Correlation Between AcadeMedia and G5 Entertainment

Can any of the company-specific risk be diversified away by investing in both AcadeMedia and G5 Entertainment 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 AcadeMedia and G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AcadeMedia AB and G5 Entertainment AB, you can compare the effects of market volatilities on AcadeMedia and G5 Entertainment 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 AcadeMedia with a short position of G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and G5 Entertainment.

Diversification Opportunities for AcadeMedia and G5 Entertainment

0.91

Correlation Coefficient

AcadeMedia  G5 Entertainment

Almost no diversification

The 3 months correlation between AcadeMedia and 0QUS is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB and G5 Entertainment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment and AcadeMedia 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 AcadeMedia AB are associated (or correlated) with G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment has no effect on the direction of AcadeMedia i.e., AcadeMedia and G5 Entertainment go up and down completely randomly.

Pair Corralation between AcadeMedia and G5 Entertainment

Assuming the 90 days trading horizon AcadeMedia is expected to generate 1.22 times less return on investment than G5 Entertainment. But when comparing it to its historical volatility, AcadeMedia AB is 1.48 times less risky than G5 Entertainment. It trades about 0.3 of its potential returns per unit of risk. G5 Entertainment AB is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  10,120  in G5 Entertainment AB on December 2, 2024 and sell it today you would earn a total of  4,020  from holding G5 Entertainment AB or generate 39.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

AcadeMedia AB  vs.  G5 Entertainment AB

AcadeMedia AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AcadeMedia AB are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AcadeMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

G5 Entertainment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, G5 Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AcadeMedia and G5 Entertainment

The main advantage of trading using opposite AcadeMedia and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AcadeMedia position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.

The idea behind AcadeMedia AB and G5 Entertainment AB 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.