Correlation Between Wintec Co and GAMEVIL

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

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

Diversification Opportunities for Wintec Co and GAMEVIL

-0.24

Correlation Coefficient

Wintec Co  GAMEVIL

Very good diversification

The 3 months correlation between Wintec and GAMEVIL is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Wintec Co and GAMEVIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMEVIL and Wintec Co 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 Wintec Co are associated (or correlated) with GAMEVIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMEVIL has no effect on the direction of Wintec Co i.e., Wintec Co and GAMEVIL go up and down completely randomly.

Pair Corralation between Wintec Co and GAMEVIL

Assuming the 90 days trading horizon Wintec Co is expected to generate 8.02 times less return on investment than GAMEVIL. But when comparing it to its historical volatility, Wintec Co is 1.62 times less risky than GAMEVIL. It trades about 0.04 of its potential returns per unit of risk. GAMEVIL is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,165,000  in GAMEVIL on September 15, 2024 and sell it today you would earn a total of  1,655,000  from holding GAMEVIL or generate 76.44% return on investment over 90 days.

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

Wintec Co  vs.  GAMEVIL

Wintec Co

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wintec Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wintec Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GAMEVIL

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GAMEVIL are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GAMEVIL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wintec Co and GAMEVIL

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

The idea behind Wintec Co and GAMEVIL 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.