Correlation Between 3R Games and M Food
Can any of the company-specific risk be diversified away by investing in both 3R Games and M Food 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 3R Games and M Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3R Games SA and M Food SA, you can compare the effects of market volatilities on 3R Games and M Food 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 3R Games with a short position of M Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3R Games and M Food.
Diversification Opportunities for 3R Games and M Food
Good diversification
The 3 months correlation between 3RG and MFD is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding 3R Games SA and M Food SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Food SA and 3R 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 3R Games SA are associated (or correlated) with M Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Food SA has no effect on the direction of 3R Games i.e., 3R Games and M Food go up and down completely randomly.
Pair Corralation between 3R Games and M Food
Assuming the 90 days trading horizon 3R Games SA is expected to generate 0.97 times more return on investment than M Food. However, 3R Games SA is 1.03 times less risky than M Food. It trades about 0.15 of its potential returns per unit of risk. M Food SA is currently generating about 0.05 per unit of risk. If you would invest 28.00 in 3R Games SA on December 1, 2024 and sell it today you would earn a total of 17.00 from holding 3R Games SA or generate 60.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 93.22% |
Values | Daily Returns |
3R Games SA vs. M Food SA
Performance |
Timeline |
3R Games SA |
M Food SA |
3R Games and M Food Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with 3R Games and M Food
The main advantage of trading using opposite 3R Games and M Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3R Games position performs unexpectedly, M Food 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 M Food will offset losses from the drop in M Food's long position.The idea behind 3R Games SA and M Food SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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