Correlation Between Marstons PLC and Contagious Gaming

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

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

Diversification Opportunities for Marstons PLC and Contagious Gaming

1.0

Correlation Coefficient

Marstons PLC  Contagious Gaming

No risk reduction

The 3 months correlation between Marstons and Contagious is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Contagious Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contagious Gaming and Marstons PLC 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 Marstons PLC are associated (or correlated) with Contagious Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contagious Gaming has no effect on the direction of Marstons PLC i.e., Marstons PLC and Contagious Gaming go up and down completely randomly.

Pair Corralation between Marstons PLC and Contagious Gaming

Assuming the 90 days horizon Marstons PLC is expected to generate 0.56 times more return on investment than Contagious Gaming. However, Marstons PLC is 1.79 times less risky than Contagious Gaming. It trades about 0.02 of its potential returns per unit of risk. Contagious Gaming is currently generating about 0.0 per unit of risk. If you would invest  399.00  in Marstons PLC on October 5, 2024 and sell it today you would earn a total of  29.00  from holding Marstons PLC or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.6%
Values	Daily Returns

Marstons PLC  vs.  Contagious Gaming

Marstons PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marstons PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marstons PLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Contagious Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Marstons PLC and Contagious Gaming

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

The idea behind Marstons PLC and Contagious 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .