Correlation Between Gaming Factory and Develia SA

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

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

Diversification Opportunities for Gaming Factory and Develia SA

0.53

Correlation Coefficient

Gaming Factory  Develia SA

Very weak diversification

The 3 months correlation between Gaming and Develia is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Factory SA and Develia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Develia SA and Gaming Factory 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 Gaming Factory SA are associated (or correlated) with Develia SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Develia SA has no effect on the direction of Gaming Factory i.e., Gaming Factory and Develia SA go up and down completely randomly.

Pair Corralation between Gaming Factory and Develia SA

Assuming the 90 days trading horizon Gaming Factory SA is expected to generate 2.37 times more return on investment than Develia SA. However, Gaming Factory is 2.37 times more volatile than Develia SA. It trades about 0.22 of its potential returns per unit of risk. Develia SA is currently generating about 0.14 per unit of risk. If you would invest  704.00  in Gaming Factory SA on December 30, 2024 and sell it today you would earn a total of  491.00  from holding Gaming Factory SA or generate 69.74% return on investment over 90 days.

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

Gaming Factory SA  vs.  Develia SA

Gaming Factory SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming Factory SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Gaming Factory reported solid returns over the last few months and may actually be approaching a breakup point.

Develia SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Develia SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Develia SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gaming Factory and Develia SA

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

The idea behind Gaming Factory SA and Develia SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.