Correlation Between Contagious Gaming and Rocky Mountain

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

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

Diversification Opportunities for Contagious Gaming and Rocky Mountain

0.0

Correlation Coefficient

Contagious Gaming  Rocky Mountain

Pay attention - limited upside

The 3 months correlation between Contagious and Rocky is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Contagious Gaming and Rocky Mountain Liquor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Liquor and Contagious 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 Contagious Gaming are associated (or correlated) with Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Liquor has no effect on the direction of Contagious Gaming i.e., Contagious Gaming and Rocky Mountain go up and down completely randomly.

Pair Corralation between Contagious Gaming and Rocky Mountain

Assuming the 90 days horizon Contagious Gaming is expected to generate 1.41 times more return on investment than Rocky Mountain. However, Contagious Gaming is 1.41 times more volatile than Rocky Mountain Liquor. It trades about 0.03 of its potential returns per unit of risk. Rocky Mountain Liquor is currently generating about 0.02 per unit of risk. If you would invest  1.00  in Contagious Gaming on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Contagious Gaming or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Contagious Gaming  vs.  Rocky Mountain Liquor

Contagious Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rocky Mountain Liquor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Mountain Liquor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Contagious Gaming and Rocky Mountain

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

The idea behind Contagious Gaming and Rocky Mountain Liquor 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.