Correlation Between Take Two and Patria Investments

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

By analyzing existing cross correlation between Take Two Interactive Software and Patria Investments Limited, you can compare the effects of market volatilities on Take Two and Patria Investments 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 Take Two with a short position of Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Patria Investments.

Diversification Opportunities for Take Two and Patria Investments

0.92

Correlation Coefficient

Take Two  Patria Investments

Almost no diversification

The 3 months correlation between Take and Patria is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments and Take Two 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 Take Two Interactive Software are associated (or correlated) with Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Take Two i.e., Take Two and Patria Investments go up and down completely randomly.

Pair Corralation between Take Two and Patria Investments

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.14 times more return on investment than Patria Investments. However, Take Two is 1.14 times more volatile than Patria Investments Limited. It trades about 0.33 of its potential returns per unit of risk. Patria Investments Limited is currently generating about 0.22 per unit of risk. If you would invest  20,842  in Take Two Interactive Software on October 6, 2024 and sell it today you would earn a total of  8,232  from holding Take Two Interactive Software or generate 39.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Take Two Interactive Software  vs.  Patria Investments Limited

Take Two Interactive

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Take Two sustained solid returns over the last few months and may actually be approaching a breakup point.

Patria Investments

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Patria Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and Patria Investments

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

The idea behind Take Two Interactive Software and Patria Investments Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.