Correlation Between Embracer Group and Sega Sammy

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

By analyzing existing cross correlation between Embracer Group AB and Sega Sammy Holdings, you can compare the effects of market volatilities on Embracer Group and Sega Sammy 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 Embracer Group with a short position of Sega Sammy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embracer Group and Sega Sammy.

Diversification Opportunities for Embracer Group and Sega Sammy

-0.13

Correlation Coefficient

Embracer Group  Sega Sammy

Good diversification

The 3 months correlation between Embracer and Sega is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Embracer Group AB and Sega Sammy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sega Sammy Holdings and Embracer Group 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 Embracer Group AB are associated (or correlated) with Sega Sammy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sega Sammy Holdings has no effect on the direction of Embracer Group i.e., Embracer Group and Sega Sammy go up and down completely randomly.

Pair Corralation between Embracer Group and Sega Sammy

Assuming the 90 days horizon Embracer Group AB is expected to generate 61.0 times more return on investment than Sega Sammy. However, Embracer Group is 61.0 times more volatile than Sega Sammy Holdings. It trades about 0.1 of its potential returns per unit of risk. Sega Sammy Holdings is currently generating about 0.0 per unit of risk. If you would invest  1,653  in Embracer Group AB on December 29, 2024 and sell it today you would lose (538.00) from holding Embracer Group AB or give up 32.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Embracer Group AB  vs.  Sega Sammy Holdings

Embracer Group AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embracer Group AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Embracer Group reported solid returns over the last few months and may actually be approaching a breakup point.

Sega Sammy Holdings

Risk-Adjusted Performance

Weak

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

Pair Trading with Embracer Group and Sega Sammy

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

The idea behind Embracer Group AB and Sega Sammy Holdings 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.