Correlation Between AroCell AB and Fractal Gaming

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

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

Diversification Opportunities for AroCell AB and Fractal Gaming

0.81

Correlation Coefficient

AroCell AB  Fractal Gaming

Very poor diversification

The 3 months correlation between AroCell and Fractal is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AroCell AB and Fractal Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fractal Gaming Group and AroCell AB 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 AroCell AB are associated (or correlated) with Fractal Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fractal Gaming Group has no effect on the direction of AroCell AB i.e., AroCell AB and Fractal Gaming go up and down completely randomly.

Pair Corralation between AroCell AB and Fractal Gaming

Assuming the 90 days trading horizon AroCell AB is expected to generate 1.86 times more return on investment than Fractal Gaming. However, AroCell AB is 1.86 times more volatile than Fractal Gaming Group. It trades about 0.17 of its potential returns per unit of risk. Fractal Gaming Group is currently generating about 0.12 per unit of risk. If you would invest  40.00  in AroCell AB on November 29, 2024 and sell it today you would earn a total of  19.00  from holding AroCell AB or generate 47.5% return on investment over 90 days.

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

AroCell AB  vs.  Fractal Gaming Group

AroCell AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AroCell AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AroCell AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fractal Gaming Group

Risk-Adjusted Performance

OK

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

Pair Trading with AroCell AB and Fractal Gaming

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

The idea behind AroCell AB and Fractal Gaming Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.