Correlation Between Corsair Gaming and TRAINLINE PLC

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

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

Diversification Opportunities for Corsair Gaming and TRAINLINE PLC

0.57

Correlation Coefficient

Corsair Gaming  TRAINLINE PLC

Very weak diversification

The 3 months correlation between Corsair and TRAINLINE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Corsair Gaming and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS and Corsair 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 Corsair Gaming are associated (or correlated) with TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of Corsair Gaming i.e., Corsair Gaming and TRAINLINE PLC go up and down completely randomly.

Pair Corralation between Corsair Gaming and TRAINLINE PLC

Assuming the 90 days horizon Corsair Gaming is expected to under-perform the TRAINLINE PLC. In addition to that, Corsair Gaming is 2.26 times more volatile than TRAINLINE PLC LS. It trades about -0.07 of its total potential returns per unit of risk. TRAINLINE PLC LS is currently generating about -0.05 per unit of volatility. If you would invest  505.00  in TRAINLINE PLC LS on October 11, 2024 and sell it today you would lose (9.00) from holding TRAINLINE PLC LS or give up 1.78% of portfolio value over 90 days.

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

Corsair Gaming  vs.  TRAINLINE PLC LS

Corsair Gaming

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corsair Gaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corsair Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

TRAINLINE PLC LS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAINLINE PLC LS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TRAINLINE PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corsair Gaming and TRAINLINE PLC

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

The idea behind Corsair Gaming and TRAINLINE PLC LS 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.