Correlation Between G5 Entertainment and Online Brands

Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Online Brands 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 Online Brands 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 Online Brands Nordic, you can compare the effects of market volatilities on G5 Entertainment and Online Brands 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 Online Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Online Brands.

Diversification Opportunities for G5 Entertainment and Online Brands

-0.22

Correlation Coefficient

G5 Entertainment  Online Brands

Very good diversification

The 3 months correlation between G5EN and Online is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment publ and Online Brands Nordic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Online Brands Nordic 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 Online Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Online Brands Nordic has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Online Brands go up and down completely randomly.

Pair Corralation between G5 Entertainment and Online Brands

Assuming the 90 days trading horizon G5 Entertainment is expected to generate 1.84 times less return on investment than Online Brands. But when comparing it to its historical volatility, G5 Entertainment publ is 2.44 times less risky than Online Brands. It trades about 0.19 of its potential returns per unit of risk. Online Brands Nordic is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  946.00  in Online Brands Nordic on September 15, 2024 and sell it today you would earn a total of  429.00  from holding Online Brands Nordic or generate 45.35% return on investment over 90 days.

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

G5 Entertainment publ  vs.  Online Brands Nordic

G5 Entertainment publ

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment publ are ranked lower than 15 (%) 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.

Online Brands Nordic

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Online Brands Nordic are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Online Brands unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G5 Entertainment and Online Brands

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

The idea behind G5 Entertainment publ and Online Brands Nordic 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.