Correlation Between Userjoy Technology and International Games

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

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

Diversification Opportunities for Userjoy Technology and International Games

0.21

Correlation Coefficient

Userjoy Technology  International Games

Modest diversification

The 3 months correlation between Userjoy and International is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Userjoy Technology Co and International Games System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Games and Userjoy Technology 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 Userjoy Technology Co are associated (or correlated) with International Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Games has no effect on the direction of Userjoy Technology i.e., Userjoy Technology and International Games go up and down completely randomly.

Pair Corralation between Userjoy Technology and International Games

Assuming the 90 days trading horizon Userjoy Technology Co is expected to under-perform the International Games. But the stock apears to be less risky and, when comparing its historical volatility, Userjoy Technology Co is 4.04 times less risky than International Games. The stock trades about -0.07 of its potential returns per unit of risk. The International Games System is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  75,900  in International Games System on September 1, 2024 and sell it today you would earn a total of  20,100  from holding International Games System or generate 26.48% return on investment over 90 days.

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

Userjoy Technology Co  vs.  International Games System

Userjoy Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Userjoy Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Userjoy Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

International Games

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Games System are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, International Games showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Userjoy Technology and International Games

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

The idea behind Userjoy Technology Co and International Games System 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.