Correlation Between Allied Gaming and Guild Esports

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

Diversification Opportunities for Allied Gaming and Guild Esports

0.1

Correlation Coefficient

Allied Gaming  Guild Esports

Average diversification

The 3 months correlation between Allied and Guild is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Allied Gaming Entertainment and Guild Esports Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Esports Plc 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 Guild Esports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Esports Plc has no effect on the direction of Allied Gaming i.e., Allied Gaming and Guild Esports go up and down completely randomly.

Pair Corralation between Allied Gaming and Guild Esports

Assuming the 90 days horizon Allied Gaming is expected to generate 5.17 times less return on investment than Guild Esports. But when comparing it to its historical volatility, Allied Gaming Entertainment is 2.71 times less risky than Guild Esports. It trades about 0.03 of its potential returns per unit of risk. Guild Esports Plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Guild Esports Plc on October 12, 2024 and sell it today you would lose (1.33) from holding Guild Esports Plc or give up 73.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.62%
Values	Daily Returns

Allied Gaming Entertainment  vs.  Guild Esports Plc

Allied Gaming Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allied Gaming Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Allied Gaming is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Guild Esports Plc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guild Esports Plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Guild Esports reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allied Gaming and Guild Esports

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

The idea behind Allied Gaming Entertainment and Guild Esports Plc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.