Correlation Between Notoria and Gaming Factory

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

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

Diversification Opportunities for Notoria and Gaming Factory

0.32

Correlation Coefficient

Notoria  Gaming Factory

Weak diversification

The 3 months correlation between Notoria and Gaming is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Notoria and Gaming Factory SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Factory SA and Notoria 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 Notoria are associated (or correlated) with Gaming Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Factory SA has no effect on the direction of Notoria i.e., Notoria and Gaming Factory go up and down completely randomly.

Pair Corralation between Notoria and Gaming Factory

Assuming the 90 days trading horizon Notoria is expected to generate 2.3 times less return on investment than Gaming Factory. But when comparing it to its historical volatility, Notoria is 2.46 times less risky than Gaming Factory. It trades about 0.24 of its potential returns per unit of risk. Gaming Factory SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  704.00  in Gaming Factory SA on December 30, 2024 and sell it today you would earn a total of  491.00  from holding Gaming Factory SA or generate 69.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	23.81%
Values	Daily Returns

Notoria  vs.  Gaming Factory SA

Notoria

Risk-Adjusted Performance

Solid

Over the last 90 days Notoria has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Notoria reported solid returns over the last few months and may actually be approaching a breakup point.

Gaming Factory SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming Factory SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Gaming Factory reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Notoria and Gaming Factory

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

The idea behind Notoria and Gaming Factory 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.