Correlation Between Champion Gaming and ROYALTY

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

By analyzing existing cross correlation between Champion Gaming Group and ROYALTY PHARMA PLC, you can compare the effects of market volatilities on Champion Gaming and ROYALTY 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 Champion Gaming with a short position of ROYALTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Gaming and ROYALTY.

Diversification Opportunities for Champion Gaming and ROYALTY

0.16

Correlation Coefficient

Champion Gaming  ROYALTY

Average diversification

The 3 months correlation between Champion and ROYALTY is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Champion Gaming Group and ROYALTY PHARMA PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROYALTY PHARMA PLC and Champion Gaming 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 Champion Gaming Group are associated (or correlated) with ROYALTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROYALTY PHARMA PLC has no effect on the direction of Champion Gaming i.e., Champion Gaming and ROYALTY go up and down completely randomly.

Pair Corralation between Champion Gaming and ROYALTY

Assuming the 90 days horizon Champion Gaming Group is expected to under-perform the ROYALTY. In addition to that, Champion Gaming is 29.73 times more volatile than ROYALTY PHARMA PLC. It trades about -0.23 of its total potential returns per unit of risk. ROYALTY PHARMA PLC is currently generating about -0.17 per unit of volatility. If you would invest  8,467  in ROYALTY PHARMA PLC on October 27, 2024 and sell it today you would lose (222.00) from holding ROYALTY PHARMA PLC or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Champion Gaming Group  vs.  ROYALTY PHARMA PLC

Champion Gaming Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ROYALTY PHARMA PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROYALTY PHARMA PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ROYALTY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Champion Gaming and ROYALTY

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

The idea behind Champion Gaming Group and ROYALTY PHARMA PLC 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.