Correlation Between GD Culture and Alpha Esports

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

By analyzing existing cross correlation between GD Culture Group and Alpha Esports Tech, you can compare the effects of market volatilities on GD Culture and Alpha Esports 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 GD Culture with a short position of Alpha Esports. Check out your portfolio center. Please also check ongoing floating volatility patterns of GD Culture and Alpha Esports.

Diversification Opportunities for GD Culture and Alpha Esports

-0.26

Correlation Coefficient

GD Culture  Alpha Esports

Very good diversification

The 3 months correlation between GDC and Alpha is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GD Culture Group and Alpha Esports Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Esports Tech and GD Culture 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 GD Culture Group are associated (or correlated) with Alpha Esports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Esports Tech has no effect on the direction of GD Culture i.e., GD Culture and Alpha Esports go up and down completely randomly.

Pair Corralation between GD Culture and Alpha Esports

Considering the 90-day investment horizon GD Culture is expected to generate 5.35 times less return on investment than Alpha Esports. But when comparing it to its historical volatility, GD Culture Group is 3.57 times less risky than Alpha Esports. It trades about 0.08 of its potential returns per unit of risk. Alpha Esports Tech is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.82  in Alpha Esports Tech on December 27, 2024 and sell it today you would lose (0.02) from holding Alpha Esports Tech or give up 2.44% of portfolio value over 90 days.

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

GD Culture Group  vs.  Alpha Esports Tech

GD Culture Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GD Culture Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, GD Culture exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alpha Esports Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Esports Tech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alpha Esports reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GD Culture and Alpha Esports

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

The idea behind GD Culture Group and Alpha Esports Tech 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 Global Correlations module to find global opportunities by holding instruments from different markets.