Correlation Between GameStop Corp and XIAO I

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

By analyzing existing cross correlation between GameStop Corp and XIAO I American, you can compare the effects of market volatilities on GameStop Corp and XIAO I 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 GameStop Corp with a short position of XIAO I. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and XIAO I.

Diversification Opportunities for GameStop Corp and XIAO I

0.16

Correlation Coefficient

GameStop Corp  XIAO I

Average diversification

The 3 months correlation between GameStop and XIAO is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and XIAO I American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAO I American and GameStop Corp 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 GameStop Corp are associated (or correlated) with XIAO I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAO I American has no effect on the direction of GameStop Corp i.e., GameStop Corp and XIAO I go up and down completely randomly.

Pair Corralation between GameStop Corp and XIAO I

Considering the 90-day investment horizon GameStop Corp is expected to generate 0.62 times more return on investment than XIAO I. However, GameStop Corp is 1.62 times less risky than XIAO I. It trades about 0.22 of its potential returns per unit of risk. XIAO I American is currently generating about -0.07 per unit of risk. If you would invest  2,793  in GameStop Corp on October 10, 2024 and sell it today you would earn a total of  503.00  from holding GameStop Corp or generate 18.01% return on investment over 90 days.

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

GameStop Corp  vs.  XIAO I American

GameStop Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, GameStop Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

XIAO I American

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XIAO I American are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, XIAO I may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GameStop Corp and XIAO I

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

The idea behind GameStop Corp and XIAO I American 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.