Correlation Between GameStop Corp and Hemisphere Energy

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

By analyzing existing cross correlation between GameStop Corp and Hemisphere Energy Corp, you can compare the effects of market volatilities on GameStop Corp and Hemisphere Energy 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 Hemisphere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Hemisphere Energy.

Diversification Opportunities for GameStop Corp and Hemisphere Energy

0.29

Correlation Coefficient

GameStop Corp  Hemisphere Energy

Modest diversification

The 3 months correlation between GameStop and Hemisphere is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Hemisphere Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy Corp 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 Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy Corp has no effect on the direction of GameStop Corp i.e., GameStop Corp and Hemisphere Energy go up and down completely randomly.

Pair Corralation between GameStop Corp and Hemisphere Energy

Assuming the 90 days trading horizon GameStop Corp is expected to generate 2.71 times more return on investment than Hemisphere Energy. However, GameStop Corp is 2.71 times more volatile than Hemisphere Energy Corp. It trades about 0.18 of its potential returns per unit of risk. Hemisphere Energy Corp is currently generating about 0.12 per unit of risk. If you would invest  1,794  in GameStop Corp on September 17, 2024 and sell it today you would earn a total of  867.00  from holding GameStop Corp or generate 48.33% return on investment over 90 days.

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

GameStop Corp  vs.  Hemisphere Energy Corp

GameStop Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GameStop Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Hemisphere Energy Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hemisphere Energy Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hemisphere Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GameStop Corp and Hemisphere Energy

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

The idea behind GameStop Corp and Hemisphere Energy Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.