Correlation Between CI Games and Volkswagen

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

By analyzing existing cross correlation between CI Games SA and Volkswagen AG Non Vtg, you can compare the effects of market volatilities on CI Games and Volkswagen 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 CI Games with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Games and Volkswagen.

Diversification Opportunities for CI Games and Volkswagen

0.41

Correlation Coefficient

CI Games  Volkswagen

Very weak diversification

The 3 months correlation between CIG and Volkswagen is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CI Games SA and Volkswagen AG Non Vtg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG Non and CI Games 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 CI Games SA are associated (or correlated) with Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG Non has no effect on the direction of CI Games i.e., CI Games and Volkswagen go up and down completely randomly.

Pair Corralation between CI Games and Volkswagen

Assuming the 90 days trading horizon CI Games SA is expected to generate 1.26 times more return on investment than Volkswagen. However, CI Games is 1.26 times more volatile than Volkswagen AG Non Vtg. It trades about 0.24 of its potential returns per unit of risk. Volkswagen AG Non Vtg is currently generating about 0.14 per unit of risk. If you would invest  126.00  in CI Games SA on December 23, 2024 and sell it today you would earn a total of  48.00  from holding CI Games SA or generate 38.1% return on investment over 90 days.

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

CI Games SA  vs.  Volkswagen AG Non Vtg

CI Games SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Games SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CI Games reported solid returns over the last few months and may actually be approaching a breakup point.

Volkswagen AG Non

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG Non Vtg are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Volkswagen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CI Games and Volkswagen

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

The idea behind CI Games SA and Volkswagen AG Non Vtg 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.