Correlation Between Allied Gaming and New Wave

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

Diversification Opportunities for Allied Gaming and New Wave

0.2

Correlation Coefficient

Allied Gaming  New Wave

Modest diversification

The 3 months correlation between Allied and New is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Allied Gaming Entertainment and New Wave Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Holdings 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 New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Holdings has no effect on the direction of Allied Gaming i.e., Allied Gaming and New Wave go up and down completely randomly.

Pair Corralation between Allied Gaming and New Wave

If you would invest  1.21  in New Wave Holdings on September 24, 2024 and sell it today you would earn a total of  0.57  from holding New Wave Holdings or generate 47.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Allied Gaming Entertainment  vs.  New Wave Holdings

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.

New Wave Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Wave Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, New Wave reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allied Gaming and New Wave

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

The idea behind Allied Gaming Entertainment and New Wave Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.