Correlation Between GMS and Playstudios

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

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

Diversification Opportunities for GMS and Playstudios

0.93

Correlation Coefficient

GMS  Playstudios

Almost no diversification

The 3 months correlation between GMS and Playstudios is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios and GMS 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 GMS Inc are associated (or correlated) with Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of GMS i.e., GMS and Playstudios go up and down completely randomly.

Pair Corralation between GMS and Playstudios

Considering the 90-day investment horizon GMS Inc is expected to generate 0.46 times more return on investment than Playstudios. However, GMS Inc is 2.18 times less risky than Playstudios. It trades about -0.1 of its potential returns per unit of risk. Playstudios is currently generating about -0.1 per unit of risk. If you would invest  8,500  in GMS Inc on December 29, 2024 and sell it today you would lose (971.00) from holding GMS Inc or give up 11.42% of portfolio value over 90 days.

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

GMS Inc  vs.  Playstudios

GMS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Playstudios

Risk-Adjusted Performance

Very Weak

Over the last 90 days Playstudios has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GMS and Playstudios

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

The idea behind GMS Inc and Playstudios 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.