Correlation Between Gamania Digital and Bin Chuan

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

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

Diversification Opportunities for Gamania Digital and Bin Chuan

0.8

Correlation Coefficient

Gamania Digital  Bin Chuan

Very poor diversification

The 3 months correlation between Gamania and Bin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gamania Digital Entertainment and Bin Chuan Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bin Chuan Enterprise and Gamania Digital 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 Gamania Digital Entertainment are associated (or correlated) with Bin Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bin Chuan Enterprise has no effect on the direction of Gamania Digital i.e., Gamania Digital and Bin Chuan go up and down completely randomly.

Pair Corralation between Gamania Digital and Bin Chuan

Assuming the 90 days trading horizon Gamania Digital Entertainment is expected to under-perform the Bin Chuan. But the stock apears to be less risky and, when comparing its historical volatility, Gamania Digital Entertainment is 2.4 times less risky than Bin Chuan. The stock trades about -0.15 of its potential returns per unit of risk. The Bin Chuan Enterprise is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  4,410  in Bin Chuan Enterprise on September 16, 2024 and sell it today you would earn a total of  1,590  from holding Bin Chuan Enterprise or generate 36.05% return on investment over 90 days.

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

Gamania Digital Entertainment  vs.  Bin Chuan Enterprise

Gamania Digital Ente

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bin Chuan Enterprise

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bin Chuan Enterprise are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bin Chuan showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gamania Digital and Bin Chuan

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

The idea behind Gamania Digital Entertainment and Bin Chuan Enterprise 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.