Correlation Between US Financial and Gamehost

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

By analyzing existing cross correlation between US Financial 15 and Gamehost, you can compare the effects of market volatilities on US Financial and Gamehost 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 US Financial with a short position of Gamehost. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Gamehost.

Diversification Opportunities for US Financial and Gamehost

0.49

Correlation Coefficient

US Financial  Gamehost

Very weak diversification

The 3 months correlation between FTU-PB and Gamehost is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Gamehost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamehost and US Financial 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 US Financial 15 are associated (or correlated) with Gamehost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamehost has no effect on the direction of US Financial i.e., US Financial and Gamehost go up and down completely randomly.

Pair Corralation between US Financial and Gamehost

Assuming the 90 days trading horizon US Financial 15 is expected to generate 1.06 times more return on investment than Gamehost. However, US Financial is 1.06 times more volatile than Gamehost. It trades about -0.02 of its potential returns per unit of risk. Gamehost is currently generating about -0.25 per unit of risk. If you would invest  759.00  in US Financial 15 on September 23, 2024 and sell it today you would lose (4.00) from holding US Financial 15 or give up 0.53% of portfolio value over 90 days.

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

US Financial 15  vs.  Gamehost

US Financial 15

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Financial 15 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, US Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Gamehost

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamehost has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gamehost is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with US Financial and Gamehost

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

The idea behind US Financial 15 and Gamehost 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.