Correlation Between Real Luck and Empire Global

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

By analyzing existing cross correlation between Real Luck Group and Empire Global Gaming, you can compare the effects of market volatilities on Real Luck and Empire Global 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 Real Luck with a short position of Empire Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Luck and Empire Global.

Diversification Opportunities for Real Luck and Empire Global

0.0

Correlation Coefficient

Real Luck  Empire Global

Pay attention - limited upside

The 3 months correlation between Real and Empire is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Real Luck Group and Empire Global Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Global Gaming and Real Luck 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 Real Luck Group are associated (or correlated) with Empire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Global Gaming has no effect on the direction of Real Luck i.e., Real Luck and Empire Global go up and down completely randomly.

Pair Corralation between Real Luck and Empire Global

Assuming the 90 days horizon Real Luck is expected to generate 3.94 times less return on investment than Empire Global. But when comparing it to its historical volatility, Real Luck Group is 2.35 times less risky than Empire Global. It trades about 0.02 of its potential returns per unit of risk. Empire Global Gaming is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.40  in Empire Global Gaming on December 1, 2024 and sell it today you would lose (1.39) from holding Empire Global Gaming or give up 99.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.16%
Values	Daily Returns

Real Luck Group  vs.  Empire Global Gaming

Real Luck Group

Risk-Adjusted Performance

Very Weak

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

Empire Global Gaming

Risk-Adjusted Performance

Good

Over the last 90 days Empire Global Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unfluctuating technical and fundamental indicators, Empire Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Real Luck and Empire Global

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

The idea behind Real Luck Group and Empire Global 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.