Correlation Between Galaxy Entertainment and Wynn Macau

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

By analyzing existing cross correlation between Galaxy Entertainment Group and Wynn Macau Limited, you can compare the effects of market volatilities on Galaxy Entertainment and Wynn Macau 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 Galaxy Entertainment with a short position of Wynn Macau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Entertainment and Wynn Macau.

Diversification Opportunities for Galaxy Entertainment and Wynn Macau

0.63

Correlation Coefficient

Galaxy Entertainment  Wynn Macau

Poor diversification

The 3 months correlation between Galaxy and Wynn is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Entertainment Group and Wynn Macau Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Macau Limited and Galaxy Entertainment 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 Galaxy Entertainment Group are associated (or correlated) with Wynn Macau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Macau Limited has no effect on the direction of Galaxy Entertainment i.e., Galaxy Entertainment and Wynn Macau go up and down completely randomly.

Pair Corralation between Galaxy Entertainment and Wynn Macau

Assuming the 90 days trading horizon Galaxy Entertainment Group is expected to under-perform the Wynn Macau. But the stock apears to be less risky and, when comparing its historical volatility, Galaxy Entertainment Group is 1.18 times less risky than Wynn Macau. The stock trades about 0.0 of its potential returns per unit of risk. The Wynn Macau Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Wynn Macau Limited on October 23, 2024 and sell it today you would lose (13.00) from holding Wynn Macau Limited or give up 15.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Galaxy Entertainment Group  vs.  Wynn Macau Limited

Galaxy Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galaxy Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Galaxy Entertainment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Wynn Macau Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wynn Macau Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Wynn Macau is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Galaxy Entertainment and Wynn Macau

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

The idea behind Galaxy Entertainment Group and Wynn Macau Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.