Correlation Between Gaming Factory and Eco5tech

Can any of the company-specific risk be diversified away by investing in both Gaming Factory and Eco5tech 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 Eco5tech 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 eco5tech SA, you can compare the effects of market volatilities on Gaming Factory and Eco5tech 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 Eco5tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Factory and Eco5tech.

Diversification Opportunities for Gaming Factory and Eco5tech

0.04

Correlation Coefficient

Gaming Factory  Eco5tech

Significant diversification

The 3 months correlation between Gaming and Eco5tech is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Factory SA and eco5tech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eco5tech 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 Eco5tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eco5tech SA has no effect on the direction of Gaming Factory i.e., Gaming Factory and Eco5tech go up and down completely randomly.

Pair Corralation between Gaming Factory and Eco5tech

Assuming the 90 days trading horizon Gaming Factory SA is expected to under-perform the Eco5tech. But the stock apears to be less risky and, when comparing its historical volatility, Gaming Factory SA is 1.48 times less risky than Eco5tech. The stock trades about -0.02 of its potential returns per unit of risk. The eco5tech SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  112.00  in eco5tech SA on October 11, 2024 and sell it today you would earn a total of  0.00  from holding eco5tech SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.64%
Values	Daily Returns

Gaming Factory SA  vs.  eco5tech SA

Gaming Factory SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaming Factory SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Gaming Factory is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

eco5tech SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in eco5tech SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Eco5tech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gaming Factory and Eco5tech

The main advantage of trading using opposite Gaming Factory and Eco5tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Factory position performs unexpectedly, Eco5tech 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 Eco5tech will offset losses from the drop in Eco5tech's long position.

The idea behind Gaming Factory SA and eco5tech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.