Correlation Between G5 Entertainment and Nitro Games

Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Nitro Games 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 G5 Entertainment and Nitro Games into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G5 Entertainment publ and Nitro Games Oyj, you can compare the effects of market volatilities on G5 Entertainment and Nitro Games 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 G5 Entertainment with a short position of Nitro Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Nitro Games.

Diversification Opportunities for G5 Entertainment and Nitro Games

0.01

Correlation Coefficient

G5 Entertainment  Nitro Games

Significant diversification

The 3 months correlation between G5EN and Nitro is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment publ and Nitro Games Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitro Games Oyj and G5 Entertainment 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 G5 Entertainment publ are associated (or correlated) with Nitro Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitro Games Oyj has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Nitro Games go up and down completely randomly.

Pair Corralation between G5 Entertainment and Nitro Games

Assuming the 90 days trading horizon G5 Entertainment publ is expected to generate 0.61 times more return on investment than Nitro Games. However, G5 Entertainment publ is 1.63 times less risky than Nitro Games. It trades about 0.24 of its potential returns per unit of risk. Nitro Games Oyj is currently generating about 0.05 per unit of risk. If you would invest  9,050  in G5 Entertainment publ on October 25, 2024 and sell it today you would earn a total of  2,950  from holding G5 Entertainment publ or generate 32.6% return on investment over 90 days.

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

G5 Entertainment publ  vs.  Nitro Games Oyj

G5 Entertainment publ

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment publ are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, G5 Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nitro Games Oyj

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nitro Games Oyj are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nitro Games may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with G5 Entertainment and Nitro Games

The main advantage of trading using opposite G5 Entertainment and Nitro Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, Nitro Games 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 Nitro Games will offset losses from the drop in Nitro Games' long position.

The idea behind G5 Entertainment publ and Nitro Games Oyj 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.