Correlation Between Fractal Gaming and Lyko Group

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

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

Diversification Opportunities for Fractal Gaming and Lyko Group

0.75

Correlation Coefficient

Fractal Gaming  Lyko Group

Poor diversification

The 3 months correlation between Fractal and Lyko is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fractal Gaming Group and Lyko Group A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyko Group A and Fractal 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 Fractal Gaming Group are associated (or correlated) with Lyko Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyko Group A has no effect on the direction of Fractal Gaming i.e., Fractal Gaming and Lyko Group go up and down completely randomly.

Pair Corralation between Fractal Gaming and Lyko Group

Assuming the 90 days trading horizon Fractal Gaming Group is expected to generate 0.39 times more return on investment than Lyko Group. However, Fractal Gaming Group is 2.55 times less risky than Lyko Group. It trades about -0.1 of its potential returns per unit of risk. Lyko Group A is currently generating about -0.12 per unit of risk. If you would invest  3,410  in Fractal Gaming Group on September 5, 2024 and sell it today you would lose (270.00) from holding Fractal Gaming Group or give up 7.92% of portfolio value over 90 days.

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

Fractal Gaming Group  vs.  Lyko Group A

Fractal Gaming Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fractal Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lyko Group A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyko Group A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fractal Gaming and Lyko Group

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

The idea behind Fractal Gaming Group and Lyko Group A 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.