Correlation Between Gaming Realms and GreenX Metals

Can any of the company-specific risk be diversified away by investing in both Gaming Realms and GreenX Metals 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 GreenX Metals 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 GreenX Metals, you can compare the effects of market volatilities on Gaming Realms and GreenX Metals 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 GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and GreenX Metals.

Diversification Opportunities for Gaming Realms and GreenX Metals

-0.28

Correlation Coefficient

Gaming Realms  GreenX Metals

Very good diversification

The 3 months correlation between Gaming and GreenX is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals 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 GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Gaming Realms i.e., Gaming Realms and GreenX Metals go up and down completely randomly.

Pair Corralation between Gaming Realms and GreenX Metals

Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 0.73 times more return on investment than GreenX Metals. However, Gaming Realms plc is 1.38 times less risky than GreenX Metals. It trades about 0.0 of its potential returns per unit of risk. GreenX Metals is currently generating about -0.05 per unit of risk. If you would invest  3,750  in Gaming Realms plc on September 29, 2024 and sell it today you would lose (210.00) from holding Gaming Realms plc or give up 5.6% of portfolio value over 90 days.

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

Gaming Realms plc  vs.  GreenX Metals

Gaming Realms plc

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

GreenX Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, GreenX Metals is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gaming Realms and GreenX Metals

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

The idea behind Gaming Realms plc and GreenX Metals 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.