Correlation Between GAMING FAC and Nintendo

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

Diversification Opportunities for GAMING FAC and Nintendo

-0.73

Correlation Coefficient

GAMING FAC  Nintendo

Pay attention - limited upside

The 3 months correlation between GAMING and Nintendo is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo 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 Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of GAMING FAC i.e., GAMING FAC and Nintendo go up and down completely randomly.

Pair Corralation between GAMING FAC and Nintendo

Assuming the 90 days horizon GAMING FAC SA is expected to under-perform the Nintendo. But the stock apears to be less risky and, when comparing its historical volatility, GAMING FAC SA is 1.12 times less risky than Nintendo. The stock trades about -0.23 of its potential returns per unit of risk. The Nintendo Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  5,032  in Nintendo Co on September 23, 2024 and sell it today you would earn a total of  578.00  from holding Nintendo Co or generate 11.49% return on investment over 90 days.

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

GAMING FAC SA  vs.  Nintendo Co

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.

Nintendo

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nintendo Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nintendo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GAMING FAC and Nintendo

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

The idea behind GAMING FAC SA and Nintendo Co 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.