Correlation Between Computer and GAMESTOP

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

By analyzing existing cross correlation between Computer And Technologies and GAMESTOP, you can compare the effects of market volatilities on Computer and GAMESTOP 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 Computer with a short position of GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computer and GAMESTOP.

Diversification Opportunities for Computer and GAMESTOP

-0.93

Correlation Coefficient

Computer  GAMESTOP

Pay attention - limited upside

The 3 months correlation between Computer and GAMESTOP is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Computer And Technologies and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP and Computer 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 Computer And Technologies are associated (or correlated) with GAMESTOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMESTOP has no effect on the direction of Computer i.e., Computer and GAMESTOP go up and down completely randomly.

Pair Corralation between Computer and GAMESTOP

Assuming the 90 days horizon Computer And Technologies is expected to under-perform the GAMESTOP. But the stock apears to be less risky and, when comparing its historical volatility, Computer And Technologies is 1.64 times less risky than GAMESTOP. The stock trades about -0.24 of its potential returns per unit of risk. The GAMESTOP is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,592  in GAMESTOP on October 4, 2024 and sell it today you would earn a total of  462.00  from holding GAMESTOP or generate 17.82% return on investment over 90 days.

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

Computer And Technologies  vs.  GAMESTOP

Computer And Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer And Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GAMESTOP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GAMESTOP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GAMESTOP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Computer and GAMESTOP

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

The idea behind Computer And Technologies and GAMESTOP 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.