Correlation Between Four Seasons and Contagious Gaming

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

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

Diversification Opportunities for Four Seasons and Contagious Gaming

0.0

Correlation Coefficient

Four Seasons  Contagious Gaming

Pay attention - limited upside

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

Pair Corralation between Four Seasons and Contagious Gaming

Given the investment horizon of 90 days Four Seasons Education is expected to generate 6.95 times more return on investment than Contagious Gaming. However, Four Seasons is 6.95 times more volatile than Contagious Gaming. It trades about 0.05 of its potential returns per unit of risk. Contagious Gaming is currently generating about 0.0 per unit of risk. If you would invest  646.00  in Four Seasons Education on September 23, 2024 and sell it today you would earn a total of  389.00  from holding Four Seasons Education or generate 60.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	82.93%
Values	Daily Returns

Four Seasons Education  vs.  Contagious Gaming

Four Seasons Education

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Four Seasons Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Four Seasons may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. Despite nearly stable basic indicators, Contagious Gaming is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Four Seasons and Contagious Gaming

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

The idea behind Four Seasons Education and Contagious Gaming 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.