Correlation Between Network Media and Allied Gaming

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

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

Diversification Opportunities for Network Media and Allied Gaming

0.87

Correlation Coefficient

Network Media  Allied Gaming

Very poor diversification

The 3 months correlation between Network and Allied is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Network Media Group and Allied Gaming Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Gaming Entert and Network Media 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 Network Media Group are associated (or correlated) with Allied Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Gaming Entert has no effect on the direction of Network Media i.e., Network Media and Allied Gaming go up and down completely randomly.

Pair Corralation between Network Media and Allied Gaming

Assuming the 90 days horizon Network Media Group is expected to under-perform the Allied Gaming. But the otc stock apears to be less risky and, when comparing its historical volatility, Network Media Group is 2.95 times less risky than Allied Gaming. The otc stock trades about -0.01 of its potential returns per unit of risk. The Allied Gaming Entertainment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  0.20  in Allied Gaming Entertainment on September 24, 2024 and sell it today you would lose (0.18) from holding Allied Gaming Entertainment or give up 90.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	59.84%
Values	Daily Returns

Network Media Group  vs.  Allied Gaming Entertainment

Network Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Allied Gaming Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allied Gaming Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Allied Gaming is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Network Media and Allied Gaming

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

The idea behind Network Media Group and Allied Gaming Entertainment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.