Correlation Between Gamania Digital and Shanghai Commercial

Can any of the company-specific risk be diversified away by investing in both Gamania Digital and Shanghai Commercial 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 Shanghai Commercial 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 Shanghai Commercial Savings, you can compare the effects of market volatilities on Gamania Digital and Shanghai Commercial 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 Shanghai Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamania Digital and Shanghai Commercial.

Diversification Opportunities for Gamania Digital and Shanghai Commercial

-0.26

Correlation Coefficient

Gamania Digital  Shanghai Commercial

Very good diversification

The 3 months correlation between Gamania and Shanghai is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gamania Digital Entertainment and Shanghai Commercial Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Commercial 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 Shanghai Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Commercial has no effect on the direction of Gamania Digital i.e., Gamania Digital and Shanghai Commercial go up and down completely randomly.

Pair Corralation between Gamania Digital and Shanghai Commercial

Assuming the 90 days trading horizon Gamania Digital Entertainment is expected to under-perform the Shanghai Commercial. In addition to that, Gamania Digital is 1.33 times more volatile than Shanghai Commercial Savings. It trades about -0.06 of its total potential returns per unit of risk. Shanghai Commercial Savings is currently generating about 0.23 per unit of volatility. If you would invest  3,980  in Shanghai Commercial Savings on December 29, 2024 and sell it today you would earn a total of  555.00  from holding Shanghai Commercial Savings or generate 13.94% return on investment over 90 days.

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

Gamania Digital Entertainment  vs.  Shanghai Commercial Savings

Gamania Digital Ente

Risk-Adjusted Performance

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.

Shanghai Commercial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Commercial Savings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shanghai Commercial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gamania Digital and Shanghai Commercial

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

The idea behind Gamania Digital Entertainment and Shanghai Commercial Savings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.