Correlation Between Gamehost and Big Rock

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

By analyzing existing cross correlation between Gamehost and Big Rock Brewery, you can compare the effects of market volatilities on Gamehost and Big Rock 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 Gamehost with a short position of Big Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamehost and Big Rock.

Diversification Opportunities for Gamehost and Big Rock

-0.18

Correlation Coefficient

Gamehost  Big Rock

Good diversification

The 3 months correlation between Gamehost and Big is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Gamehost and Big Rock Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Rock Brewery and Gamehost 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 Gamehost are associated (or correlated) with Big Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Rock Brewery has no effect on the direction of Gamehost i.e., Gamehost and Big Rock go up and down completely randomly.

Pair Corralation between Gamehost and Big Rock

Assuming the 90 days horizon Gamehost is expected to generate 0.3 times more return on investment than Big Rock. However, Gamehost is 3.33 times less risky than Big Rock. It trades about -0.06 of its potential returns per unit of risk. Big Rock Brewery is currently generating about -0.1 per unit of risk. If you would invest  1,045  in Gamehost on October 12, 2024 and sell it today you would lose (15.00) from holding Gamehost or give up 1.44% of portfolio value over 90 days.

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

Gamehost  vs.  Big Rock Brewery

Gamehost

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamehost has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gamehost is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Big Rock Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Rock Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Big Rock is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gamehost and Big Rock

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

The idea behind Gamehost and Big Rock Brewery 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.