Correlation Between Esports Entertainment and Light Wonder

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

By analyzing existing cross correlation between Esports Entertainment Group and Light Wonder, you can compare the effects of market volatilities on Esports Entertainment and Light Wonder 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 Esports Entertainment with a short position of Light Wonder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esports Entertainment and Light Wonder.

Diversification Opportunities for Esports Entertainment and Light Wonder

0.0

Correlation Coefficient

Esports Entertainment  Light Wonder

Pay attention - limited upside

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

Pair Corralation between Esports Entertainment and Light Wonder

If you would invest  8,522  in Light Wonder on December 28, 2024 and sell it today you would earn a total of  387.00  from holding Light Wonder or generate 4.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Esports Entertainment Group  vs.  Light Wonder

Esports Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esports Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Esports Entertainment is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Light Wonder

Risk-Adjusted Performance

OK

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

Pair Trading with Esports Entertainment and Light Wonder

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

The idea behind Esports Entertainment Group and Light Wonder 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.