Correlation Between Varsav Game and Baked Games

Can any of the company-specific risk be diversified away by investing in both Varsav Game and Baked Games 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 Baked Games 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 Baked Games SA, you can compare the effects of market volatilities on Varsav Game and Baked Games 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 Baked Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varsav Game and Baked Games.

Diversification Opportunities for Varsav Game and Baked Games

-0.12

Correlation Coefficient

Varsav Game  Baked Games

Good diversification

The 3 months correlation between Varsav and Baked is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Varsav Game Studios and Baked Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baked Games 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 Baked Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baked Games SA has no effect on the direction of Varsav Game i.e., Varsav Game and Baked Games go up and down completely randomly.

Pair Corralation between Varsav Game and Baked Games

Assuming the 90 days trading horizon Varsav Game Studios is expected to generate 1.3 times more return on investment than Baked Games. However, Varsav Game is 1.3 times more volatile than Baked Games SA. It trades about 0.01 of its potential returns per unit of risk. Baked Games SA is currently generating about -0.04 per unit of risk. If you would invest  63.00  in Varsav Game Studios on November 20, 2024 and sell it today you would lose (16.00) from holding Varsav Game Studios or give up 25.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.63%
Values	Daily Returns

Varsav Game Studios  vs.  Baked Games SA

Varsav Game Studios

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Varsav Game Studios are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Varsav Game reported solid returns over the last few months and may actually be approaching a breakup point.

Baked Games SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baked Games SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Baked Games reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Varsav Game and Baked Games

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

The idea behind Varsav Game Studios and Baked Games 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..