Correlation Between Galaxy Gaming and Lizhan Environmental

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

By analyzing existing cross correlation between Galaxy Gaming and Lizhan Environmental, you can compare the effects of market volatilities on Galaxy Gaming and Lizhan Environmental 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 Lizhan Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Gaming and Lizhan Environmental.

Diversification Opportunities for Galaxy Gaming and Lizhan Environmental

0.0

Correlation Coefficient

Galaxy Gaming  Lizhan Environmental

Pay attention - limited upside

The 3 months correlation between Galaxy and Lizhan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Gaming and Lizhan Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhan Environmental 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 Lizhan Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhan Environmental has no effect on the direction of Galaxy Gaming i.e., Galaxy Gaming and Lizhan Environmental go up and down completely randomly.

Pair Corralation between Galaxy Gaming and Lizhan Environmental

If you would invest  268.00  in Galaxy Gaming on October 26, 2024 and sell it today you would earn a total of  12.00  from holding Galaxy Gaming or generate 4.48% return on investment over 90 days.

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

Galaxy Gaming  vs.  Lizhan Environmental

Galaxy Gaming

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Gaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Lizhan Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lizhan Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lizhan Environmental is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Galaxy Gaming and Lizhan Environmental

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

The idea behind Galaxy Gaming and Lizhan Environmental 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .