Correlation Between Galaxy Gaming and Take Two

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

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

Diversification Opportunities for Galaxy Gaming and Take Two

0.02

Correlation Coefficient

Galaxy Gaming  Take Two

Significant diversification

The 3 months correlation between Galaxy and Take is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Gaming and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Galaxy Gaming i.e., Galaxy Gaming and Take Two go up and down completely randomly.

Pair Corralation between Galaxy Gaming and Take Two

Given the investment horizon of 90 days Galaxy Gaming is expected to under-perform the Take Two. But the otc stock apears to be less risky and, when comparing its historical volatility, Galaxy Gaming is 1.28 times less risky than Take Two. The otc stock trades about -0.02 of its potential returns per unit of risk. The Take Two Interactive Software is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  15,294  in Take Two Interactive Software on October 8, 2024 and sell it today you would earn a total of  3,581  from holding Take Two Interactive Software or generate 23.41% return on investment over 90 days.

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

Galaxy Gaming  vs.  Take Two Interactive Software

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.

Take Two Interactive

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Take Two displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Galaxy Gaming and Take Two

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

The idea behind Galaxy Gaming and Take Two Interactive Software 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.