Correlation Between Vodka Brands and Galaxy Gaming

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

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

Diversification Opportunities for Vodka Brands and Galaxy Gaming

0.14

Correlation Coefficient

Vodka Brands  Galaxy Gaming

Average diversification

The 3 months correlation between Vodka and Galaxy is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and Galaxy Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Gaming and Vodka Brands 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 Vodka Brands Corp are associated (or correlated) with Galaxy Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Gaming has no effect on the direction of Vodka Brands i.e., Vodka Brands and Galaxy Gaming go up and down completely randomly.

Pair Corralation between Vodka Brands and Galaxy Gaming

Given the investment horizon of 90 days Vodka Brands Corp is expected to generate 1.58 times more return on investment than Galaxy Gaming. However, Vodka Brands is 1.58 times more volatile than Galaxy Gaming. It trades about 0.03 of its potential returns per unit of risk. Galaxy Gaming is currently generating about 0.02 per unit of risk. If you would invest  177.00  in Vodka Brands Corp on October 25, 2024 and sell it today you would lose (56.00) from holding Vodka Brands Corp or give up 31.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Vodka Brands Corp  vs.  Galaxy Gaming

Vodka Brands Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vodka Brands Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Vodka Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Galaxy Gaming

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Gaming are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Galaxy Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vodka Brands and Galaxy Gaming

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

The idea behind Vodka Brands Corp and Galaxy Gaming 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.