Correlation Between Galaxy Gaming and Waters

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

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

Diversification Opportunities for Galaxy Gaming and Waters

0.32

Correlation Coefficient

Galaxy Gaming  Waters

Weak diversification

The 3 months correlation between Galaxy and Waters is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Gaming and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters 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 Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of Galaxy Gaming i.e., Galaxy Gaming and Waters go up and down completely randomly.

Pair Corralation between Galaxy Gaming and Waters

Given the investment horizon of 90 days Galaxy Gaming is expected to generate 0.86 times more return on investment than Waters. However, Galaxy Gaming is 1.16 times less risky than Waters. It trades about -0.03 of its potential returns per unit of risk. Waters is currently generating about -0.15 per unit of risk. If you would invest  279.00  in Galaxy Gaming on October 10, 2024 and sell it today you would lose (2.00) from holding Galaxy Gaming or give up 0.72% 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.  Waters

Galaxy Gaming

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Gaming are ranked lower than 2 (%) 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.

Waters

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Waters may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Galaxy Gaming and Waters

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

The idea behind Galaxy Gaming and Waters 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 Transaction History module to view history of all your transactions and understand their impact on performance.