Correlation Between Varsav Game and Magna Polonia

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

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

Diversification Opportunities for Varsav Game and Magna Polonia

0.39

Correlation Coefficient

Varsav Game  Magna Polonia

Weak diversification

The 3 months correlation between Varsav and Magna is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Varsav Game Studios and Magna Polonia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Polonia SA and Varsav Game 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 Varsav Game Studios are associated (or correlated) with Magna Polonia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Polonia SA has no effect on the direction of Varsav Game i.e., Varsav Game and Magna Polonia go up and down completely randomly.

Pair Corralation between Varsav Game and Magna Polonia

Assuming the 90 days trading horizon Varsav Game Studios is expected to under-perform the Magna Polonia. In addition to that, Varsav Game is 2.66 times more volatile than Magna Polonia SA. It trades about -0.02 of its total potential returns per unit of risk. Magna Polonia SA is currently generating about -0.03 per unit of volatility. If you would invest  311.00  in Magna Polonia SA on October 8, 2024 and sell it today you would lose (39.00) from holding Magna Polonia SA or give up 12.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.86%
Values	Daily Returns

Varsav Game Studios  vs.  Magna Polonia SA

Varsav Game Studios

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Varsav Game Studios has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Varsav Game is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Magna Polonia SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magna Polonia SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Varsav Game and Magna Polonia

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

The idea behind Varsav Game Studios and Magna Polonia 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.