Correlation Between Detalion Games and SOFTWARE MANSION

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

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

Diversification Opportunities for Detalion Games and SOFTWARE MANSION

0.48

Correlation Coefficient

Detalion Games  SOFTWARE MANSION

Very weak diversification

The 3 months correlation between Detalion and SOFTWARE is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Detalion Games SA and SOFTWARE MANSION SPOLKA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTWARE MANSION SPOLKA and Detalion 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 Detalion Games SA are associated (or correlated) with SOFTWARE MANSION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTWARE MANSION SPOLKA has no effect on the direction of Detalion Games i.e., Detalion Games and SOFTWARE MANSION go up and down completely randomly.

Pair Corralation between Detalion Games and SOFTWARE MANSION

Assuming the 90 days trading horizon Detalion Games SA is expected to generate 1.46 times more return on investment than SOFTWARE MANSION. However, Detalion Games is 1.46 times more volatile than SOFTWARE MANSION SPOLKA. It trades about -0.02 of its potential returns per unit of risk. SOFTWARE MANSION SPOLKA is currently generating about -0.1 per unit of risk. If you would invest  96.00  in Detalion Games SA on September 17, 2024 and sell it today you would lose (1.00) from holding Detalion Games SA or give up 1.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	55.56%
Values	Daily Returns

Detalion Games SA  vs.  SOFTWARE MANSION SPOLKA

Detalion Games SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Detalion Games SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOFTWARE MANSION SPOLKA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SOFTWARE MANSION is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Detalion Games and SOFTWARE MANSION

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

The idea behind Detalion Games SA and SOFTWARE MANSION SPOLKA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.