Correlation Between Ibase Gaming and China Mobile

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

By analyzing existing cross correlation between Ibase Gaming and China Mobile, you can compare the effects of market volatilities on Ibase Gaming and China Mobile 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 Ibase Gaming with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ibase Gaming and China Mobile.

Diversification Opportunities for Ibase Gaming and China Mobile

-0.09

Correlation Coefficient

Ibase Gaming  China Mobile

Good diversification

The 3 months correlation between Ibase and China is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ibase Gaming and China Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile and Ibase Gaming 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 Ibase Gaming are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile has no effect on the direction of Ibase Gaming i.e., Ibase Gaming and China Mobile go up and down completely randomly.

Pair Corralation between Ibase Gaming and China Mobile

Assuming the 90 days trading horizon Ibase Gaming is expected to under-perform the China Mobile. In addition to that, Ibase Gaming is 1.89 times more volatile than China Mobile. It trades about -0.04 of its total potential returns per unit of risk. China Mobile is currently generating about 0.05 per unit of volatility. If you would invest  1,336  in China Mobile on December 25, 2024 and sell it today you would earn a total of  34.00  from holding China Mobile or generate 2.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.21%
Values	Daily Returns

Ibase Gaming  vs.  China Mobile

Ibase Gaming

Risk-Adjusted Performance

Very Weak

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

China Mobile

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Mobile are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, China Mobile is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ibase Gaming and China Mobile

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

The idea behind Ibase Gaming and China Mobile 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.