Correlation Between Gaming Realms and Batm Advanced

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

By analyzing existing cross correlation between Gaming Realms plc and Batm Advanced Communications, you can compare the effects of market volatilities on Gaming Realms and Batm Advanced 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 Gaming Realms with a short position of Batm Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Batm Advanced.

Diversification Opportunities for Gaming Realms and Batm Advanced

0.26

Correlation Coefficient

Gaming Realms  Batm Advanced

Modest diversification

The 3 months correlation between Gaming and Batm is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun and Gaming Realms 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 Gaming Realms plc are associated (or correlated) with Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Gaming Realms i.e., Gaming Realms and Batm Advanced go up and down completely randomly.

Pair Corralation between Gaming Realms and Batm Advanced

Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 0.97 times more return on investment than Batm Advanced. However, Gaming Realms plc is 1.03 times less risky than Batm Advanced. It trades about -0.01 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.14 per unit of risk. If you would invest  3,650  in Gaming Realms plc on December 29, 2024 and sell it today you would lose (130.00) from holding Gaming Realms plc or give up 3.56% of portfolio value over 90 days.

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

Gaming Realms plc  vs.  Batm Advanced Communications

Gaming Realms plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gaming Realms plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Gaming Realms is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Batm Advanced Commun

Risk-Adjusted Performance

Very Weak

Over the last 90 days Batm Advanced Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gaming Realms and Batm Advanced

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

The idea behind Gaming Realms plc and Batm Advanced Communications 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.