Correlation Between Fractal Gaming and AcadeMedia

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

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

Diversification Opportunities for Fractal Gaming and AcadeMedia

0.84

Correlation Coefficient

Fractal Gaming  AcadeMedia

Very poor diversification

The 3 months correlation between Fractal and AcadeMedia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fractal Gaming Group and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB and Fractal 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 Fractal Gaming Group are associated (or correlated) with AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of Fractal Gaming i.e., Fractal Gaming and AcadeMedia go up and down completely randomly.

Pair Corralation between Fractal Gaming and AcadeMedia

Assuming the 90 days trading horizon Fractal Gaming is expected to generate 1.5 times less return on investment than AcadeMedia. In addition to that, Fractal Gaming is 1.55 times more volatile than AcadeMedia AB. It trades about 0.13 of its total potential returns per unit of risk. AcadeMedia AB is currently generating about 0.3 per unit of volatility. If you would invest  5,930  in AcadeMedia AB on December 2, 2024 and sell it today you would earn a total of  1,910  from holding AcadeMedia AB or generate 32.21% return on investment over 90 days.

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

Fractal Gaming Group  vs.  AcadeMedia AB

Fractal Gaming Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fractal Gaming Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fractal Gaming sustained solid returns over the last few months and may actually be approaching a breakup point.

AcadeMedia AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AcadeMedia AB are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AcadeMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fractal Gaming and AcadeMedia

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

The idea behind Fractal Gaming Group and AcadeMedia AB 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.