Correlation Between Soft World and GameSparcs

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

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

Diversification Opportunities for Soft World and GameSparcs

0.08

Correlation Coefficient

Soft World  GameSparcs

Significant diversification

The 3 months correlation between Soft and GameSparcs is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Soft World International and GameSparcs Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameSparcs and Soft World 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 Soft World International 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 Soft World i.e., Soft World and GameSparcs go up and down completely randomly.

Pair Corralation between Soft World and GameSparcs

Assuming the 90 days trading horizon Soft World International is expected to under-perform the GameSparcs. But the stock apears to be less risky and, when comparing its historical volatility, Soft World International is 1.7 times less risky than GameSparcs. The stock trades about -0.08 of its potential returns per unit of risk. The GameSparcs Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,730  in GameSparcs Co on October 23, 2024 and sell it today you would earn a total of  210.00  from holding GameSparcs Co or generate 3.66% return on investment over 90 days.

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

Soft World International  vs.  GameSparcs Co

Soft World International

Risk-Adjusted Performance

0 of 100

Very Weak

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

GameSparcs

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GameSparcs Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, GameSparcs may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Soft World and GameSparcs

The main advantage of trading using opposite Soft World and GameSparcs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soft World 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 Soft World International 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.