Correlation Between TROPHY GAMES and PERENNIAL ENERGY

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

By analyzing existing cross correlation between TROPHY GAMES DEV and PERENNIAL ENERGY HD 01, you can compare the effects of market volatilities on TROPHY GAMES and PERENNIAL ENERGY 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 TROPHY GAMES with a short position of PERENNIAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of TROPHY GAMES and PERENNIAL ENERGY.

Diversification Opportunities for TROPHY GAMES and PERENNIAL ENERGY

0.22

Correlation Coefficient

TROPHY GAMES  PERENNIAL ENERGY

Modest diversification

The 3 months correlation between TROPHY and PERENNIAL is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding TROPHY GAMES DEV and PERENNIAL ENERGY HD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PERENNIAL ENERGY and TROPHY 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 TROPHY GAMES DEV are associated (or correlated) with PERENNIAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PERENNIAL ENERGY has no effect on the direction of TROPHY GAMES i.e., TROPHY GAMES and PERENNIAL ENERGY go up and down completely randomly.

Pair Corralation between TROPHY GAMES and PERENNIAL ENERGY

Assuming the 90 days horizon TROPHY GAMES DEV is expected to generate 0.59 times more return on investment than PERENNIAL ENERGY. However, TROPHY GAMES DEV is 1.7 times less risky than PERENNIAL ENERGY. It trades about -0.13 of its potential returns per unit of risk. PERENNIAL ENERGY HD 01 is currently generating about -0.26 per unit of risk. If you would invest  93.00  in TROPHY GAMES DEV on September 22, 2024 and sell it today you would lose (7.00) from holding TROPHY GAMES DEV or give up 7.53% of portfolio value over 90 days.

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

TROPHY GAMES DEV  vs.  PERENNIAL ENERGY HD 01

TROPHY GAMES DEV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TROPHY GAMES DEV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PERENNIAL ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PERENNIAL ENERGY HD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TROPHY GAMES and PERENNIAL ENERGY

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

The idea behind TROPHY GAMES DEV and PERENNIAL ENERGY HD 01 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.