Correlation Between ECC Games and Comp SA

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

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

Diversification Opportunities for ECC Games and Comp SA

0.0

Correlation Coefficient

ECC Games  Comp SA

Pay attention - limited upside

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

Pair Corralation between ECC Games and Comp SA

Assuming the 90 days trading horizon ECC Games is expected to generate 1.28 times less return on investment than Comp SA. In addition to that, ECC Games is 3.4 times more volatile than Comp SA. It trades about 0.07 of its total potential returns per unit of risk. Comp SA is currently generating about 0.32 per unit of volatility. If you would invest  13,800  in Comp SA on December 29, 2024 and sell it today you would earn a total of  5,550  from holding Comp SA or generate 40.22% return on investment over 90 days.

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

ECC Games SA  vs.  Comp SA

ECC Games SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ECC Games SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ECC Games reported solid returns over the last few months and may actually be approaching a breakup point.

Comp SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Comp SA are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Comp SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ECC Games and Comp SA

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

The idea behind ECC Games SA and Comp SA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.