Correlation Between EPlay Digital and GLG LIFE

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

By analyzing existing cross correlation between ePlay Digital and GLG LIFE TECH, you can compare the effects of market volatilities on EPlay Digital and GLG LIFE 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 EPlay Digital with a short position of GLG LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPlay Digital and GLG LIFE.

Diversification Opportunities for EPlay Digital and GLG LIFE

1.0

Correlation Coefficient

EPlay Digital  GLG LIFE

No risk reduction

The 3 months correlation between EPlay and GLG is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ePlay Digital and GLG LIFE TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLG LIFE TECH and EPlay Digital 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 ePlay Digital are associated (or correlated) with GLG LIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLG LIFE TECH has no effect on the direction of EPlay Digital i.e., EPlay Digital and GLG LIFE go up and down completely randomly.

Pair Corralation between EPlay Digital and GLG LIFE

Assuming the 90 days trading horizon ePlay Digital is expected to generate 2.18 times more return on investment than GLG LIFE. However, EPlay Digital is 2.18 times more volatile than GLG LIFE TECH. It trades about 0.15 of its potential returns per unit of risk. GLG LIFE TECH is currently generating about 0.08 per unit of risk. If you would invest  0.50  in ePlay Digital on September 23, 2024 and sell it today you would lose (0.40) from holding ePlay Digital or give up 80.0% of portfolio value over 90 days.

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

ePlay Digital  vs.  GLG LIFE TECH

ePlay Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ePlay Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EPlay Digital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GLG LIFE TECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLG LIFE TECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GLG LIFE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EPlay Digital and GLG LIFE

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

The idea behind ePlay Digital and GLG LIFE TECH 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.