Correlation Between Chief Telecom and GAME HOURS

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

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

Diversification Opportunities for Chief Telecom and GAME HOURS

0.5

Correlation Coefficient

Chief Telecom  GAME HOURS

Very weak diversification

The 3 months correlation between Chief and GAME is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chief Telecom and GAME HOURS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAME HOURS and Chief Telecom 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 Chief Telecom are associated (or correlated) with GAME HOURS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAME HOURS has no effect on the direction of Chief Telecom i.e., Chief Telecom and GAME HOURS go up and down completely randomly.

Pair Corralation between Chief Telecom and GAME HOURS

Assuming the 90 days trading horizon Chief Telecom is expected to generate 0.46 times more return on investment than GAME HOURS. However, Chief Telecom is 2.19 times less risky than GAME HOURS. It trades about -0.2 of its potential returns per unit of risk. GAME HOURS is currently generating about -0.33 per unit of risk. If you would invest  48,200  in Chief Telecom on October 20, 2024 and sell it today you would lose (4,300) from holding Chief Telecom or give up 8.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Chief Telecom  vs.  GAME HOURS

Chief Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chief Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

GAME HOURS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GAME HOURS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, GAME HOURS showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chief Telecom and GAME HOURS

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

The idea behind Chief Telecom and GAME HOURS 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.