Correlation Between Henderson Investment and Good Gaming

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

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

Diversification Opportunities for Henderson Investment and Good Gaming

-0.45

Correlation Coefficient

Henderson Investment  Good Gaming

Very good diversification

The 3 months correlation between Henderson and Good is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Investment Ltd and Good Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Gaming and Henderson Investment 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 Henderson Investment Ltd are associated (or correlated) with Good Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Gaming has no effect on the direction of Henderson Investment i.e., Henderson Investment and Good Gaming go up and down completely randomly.

Pair Corralation between Henderson Investment and Good Gaming

Assuming the 90 days horizon Henderson Investment Ltd is expected to under-perform the Good Gaming. But the pink sheet apears to be less risky and, when comparing its historical volatility, Henderson Investment Ltd is 1.11 times less risky than Good Gaming. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Good Gaming is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.93  in Good Gaming on October 9, 2024 and sell it today you would earn a total of  0.17  from holding Good Gaming or generate 18.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Henderson Investment Ltd  vs.  Good Gaming

Henderson Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henderson Investment Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Good Gaming

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Good Gaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Good Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Henderson Investment and Good Gaming

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

The idea behind Henderson Investment Ltd and Good Gaming 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.