Correlation Between Live Motion and Detalion Games

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

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

Diversification Opportunities for Live Motion and Detalion Games

0.45

Correlation Coefficient

Live Motion  Detalion Games

Very weak diversification

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

Pair Corralation between Live Motion and Detalion Games

Assuming the 90 days trading horizon Live Motion Games is expected to generate 0.55 times more return on investment than Detalion Games. However, Live Motion Games is 1.83 times less risky than Detalion Games. It trades about -0.07 of its potential returns per unit of risk. Detalion Games SA is currently generating about -0.09 per unit of risk. If you would invest  106.00  in Live Motion Games on December 1, 2024 and sell it today you would lose (3.00) from holding Live Motion Games or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	45.45%
Values	Daily Returns

Live Motion Games  vs.  Detalion Games SA

Live Motion Games

Risk-Adjusted Performance

Very Weak

Over the last 90 days Live Motion Games has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Live Motion is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Detalion Games SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Detalion Games SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Detalion Games reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Motion and Detalion Games

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

The idea behind Live Motion Games and Detalion Games SA 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.