Correlation Between Champion Gaming and Waters

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

Diversification Opportunities for Champion Gaming and Waters

-0.5

Correlation Coefficient

Champion Gaming  Waters

Very good diversification

The 3 months correlation between Champion and Waters is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Champion Gaming Group and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters 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 Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of Champion Gaming i.e., Champion Gaming and Waters go up and down completely randomly.

Pair Corralation between Champion Gaming and Waters

Assuming the 90 days horizon Champion Gaming Group is expected to under-perform the Waters. In addition to that, Champion Gaming is 13.34 times more volatile than Waters. It trades about -0.23 of its total potential returns per unit of risk. Waters is currently generating about 0.33 per unit of volatility. If you would invest  36,976  in Waters on October 24, 2024 and sell it today you would earn a total of  3,859  from holding Waters or generate 10.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Champion Gaming Group  vs.  Waters

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 fragile 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.

Waters

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Waters unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champion Gaming and Waters

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

The idea behind Champion Gaming Group and Waters 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.