Correlation Between GAMING FAC and NexGen Energy

Can any of the company-specific risk be diversified away by investing in both GAMING FAC and NexGen Energy 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 GAMING FAC and NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GAMING FAC SA and NexGen Energy, you can compare the effects of market volatilities on GAMING FAC and NexGen Energy 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 GAMING FAC with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMING FAC and NexGen Energy.

Diversification Opportunities for GAMING FAC and NexGen Energy

-0.63

Correlation Coefficient

GAMING FAC  NexGen Energy

Excellent diversification

The 3 months correlation between GAMING and NexGen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and GAMING FAC 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 GAMING FAC SA are associated (or correlated) with NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of GAMING FAC i.e., GAMING FAC and NexGen Energy go up and down completely randomly.

Pair Corralation between GAMING FAC and NexGen Energy

Assuming the 90 days horizon GAMING FAC SA is expected to generate 0.67 times more return on investment than NexGen Energy. However, GAMING FAC SA is 1.5 times less risky than NexGen Energy. It trades about -0.23 of its potential returns per unit of risk. NexGen Energy is currently generating about -0.41 per unit of risk. If you would invest  174.00  in GAMING FAC SA on September 23, 2024 and sell it today you would lose (17.00) from holding GAMING FAC SA or give up 9.77% of portfolio value over 90 days.

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

GAMING FAC SA  vs.  NexGen Energy

GAMING FAC SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMING FAC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NexGen Energy

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NexGen Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NexGen Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GAMING FAC and NexGen Energy

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

The idea behind GAMING FAC SA and NexGen Energy 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.