Correlation Between Allied Gaming and Neogen

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

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

Diversification Opportunities for Allied Gaming and Neogen

-0.66

Correlation Coefficient

Allied Gaming  Neogen

Excellent diversification

The 3 months correlation between Allied and Neogen is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Allied Gaming Entertainment and Neogen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogen and Allied 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 Allied Gaming Entertainment are associated (or correlated) with Neogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogen has no effect on the direction of Allied Gaming i.e., Allied Gaming and Neogen go up and down completely randomly.

Pair Corralation between Allied Gaming and Neogen

Given the investment horizon of 90 days Allied Gaming Entertainment is expected to generate 1.48 times more return on investment than Neogen. However, Allied Gaming is 1.48 times more volatile than Neogen. It trades about 0.21 of its potential returns per unit of risk. Neogen is currently generating about -0.16 per unit of risk. If you would invest  73.00  in Allied Gaming Entertainment on December 20, 2024 and sell it today you would earn a total of  40.00  from holding Allied Gaming Entertainment or generate 54.79% return on investment over 90 days.

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

Allied Gaming Entertainment  vs.  Neogen

Allied Gaming Entert

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Gaming Entertainment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Allied Gaming exhibited solid returns over the last few months and may actually be approaching a breakup point.

Neogen

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Allied Gaming and Neogen

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

The idea behind Allied Gaming Entertainment and Neogen 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.