Correlation Between Allied Gaming and Sanwire

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

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

Diversification Opportunities for Allied Gaming and Sanwire

0.74

Correlation Coefficient

Allied Gaming  Sanwire

Poor diversification

The 3 months correlation between Allied and Sanwire is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Allied Gaming Entertainment and Sanwire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanwire and Allied 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 Allied Gaming Entertainment are associated (or correlated) with Sanwire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanwire has no effect on the direction of Allied Gaming i.e., Allied Gaming and Sanwire go up and down completely randomly.

Pair Corralation between Allied Gaming and Sanwire

If you would invest  0.05  in Sanwire on September 21, 2024 and sell it today you would lose (0.01) from holding Sanwire or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Allied Gaming Entertainment  vs.  Sanwire

Allied Gaming Entert

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sanwire

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sanwire are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Sanwire reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allied Gaming and Sanwire

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

The idea behind Allied Gaming Entertainment and Sanwire 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.