Correlation Between GAMING FAC and BASF SE

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

Diversification Opportunities for GAMING FAC and BASF SE

0.48

Correlation Coefficient

GAMING FAC  BASF SE

Very weak diversification

The 3 months correlation between GAMING and BASF is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of GAMING FAC i.e., GAMING FAC and BASF SE go up and down completely randomly.

Pair Corralation between GAMING FAC and BASF SE

Assuming the 90 days horizon GAMING FAC SA is expected to generate 1.8 times more return on investment than BASF SE. However, GAMING FAC is 1.8 times more volatile than BASF SE. It trades about 0.19 of its potential returns per unit of risk. BASF SE is currently generating about 0.08 per unit of risk. If you would invest  160.00  in GAMING FAC SA on December 30, 2024 and sell it today you would earn a total of  94.00  from holding GAMING FAC SA or generate 58.75% return on investment over 90 days.

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

GAMING FAC SA  vs.  BASF SE

GAMING FAC SA

Risk-Adjusted Performance

Good

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

BASF SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BASF SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BASF SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GAMING FAC and BASF SE

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

The idea behind GAMING FAC SA and BASF SE 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.