Correlation Between Celtic Plc and Guild Esports

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

By analyzing existing cross correlation between Celtic plc and Guild Esports Plc, you can compare the effects of market volatilities on Celtic Plc 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 Celtic Plc with a short position of Guild Esports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celtic Plc and Guild Esports.

Diversification Opportunities for Celtic Plc and Guild Esports

0.08

Correlation Coefficient

Celtic Plc  Guild Esports

Significant diversification

The 3 months correlation between Celtic and Guild is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Celtic plc 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 Celtic Plc 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 Celtic plc 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 Celtic Plc i.e., Celtic Plc and Guild Esports go up and down completely randomly.

Pair Corralation between Celtic Plc and Guild Esports

Assuming the 90 days horizon Celtic Plc is expected to generate 114.49 times less return on investment than Guild Esports. But when comparing it to its historical volatility, Celtic plc is 20.68 times less risky than Guild Esports. It trades about 0.01 of its potential returns per unit of risk. Guild Esports Plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.74  in Guild Esports Plc on December 29, 2024 and sell it today you would lose (0.73) from holding Guild Esports Plc or give up 98.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Celtic plc  vs.  Guild Esports Plc

Celtic plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Celtic plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Celtic Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Guild Esports Plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guild Esports Plc are ranked lower than 6 (%) 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 Celtic Plc and Guild Esports

The main advantage of trading using opposite Celtic Plc and Guild Esports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celtic Plc 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 Celtic plc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.