Correlation Between Galaxy Gaming and First Community

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

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

Diversification Opportunities for Galaxy Gaming and First Community

0.2

Correlation Coefficient

Galaxy Gaming  First Community

Modest diversification

The 3 months correlation between Galaxy and First is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Gaming and First Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Banc and Galaxy Gaming 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 Galaxy Gaming are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Banc has no effect on the direction of Galaxy Gaming i.e., Galaxy Gaming and First Community go up and down completely randomly.

Pair Corralation between Galaxy Gaming and First Community

Given the investment horizon of 90 days Galaxy Gaming is expected to generate 0.52 times more return on investment than First Community. However, Galaxy Gaming is 1.91 times less risky than First Community. It trades about -0.15 of its potential returns per unit of risk. First Community Bancshares is currently generating about -0.25 per unit of risk. If you would invest  279.00  in Galaxy Gaming on October 8, 2024 and sell it today you would lose (8.00) from holding Galaxy Gaming or give up 2.87% of portfolio value over 90 days.

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

Galaxy Gaming  vs.  First Community Bancshares

Galaxy Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

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

First Community Banc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days First Community Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, First Community is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Galaxy Gaming and First Community

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

The idea behind Galaxy Gaming and First Community Bancshares 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.