Correlation Between Gaming Corps and Embracer Group

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

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

Diversification Opportunities for Gaming Corps and Embracer Group

-0.64

Correlation Coefficient

Gaming Corps  Embracer Group

Excellent diversification

The 3 months correlation between Gaming and Embracer is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Corps AB and Embracer Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embracer Group AB and Gaming Corps 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 Gaming Corps AB are associated (or correlated) with Embracer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embracer Group AB has no effect on the direction of Gaming Corps i.e., Gaming Corps and Embracer Group go up and down completely randomly.

Pair Corralation between Gaming Corps and Embracer Group

Assuming the 90 days trading horizon Gaming Corps AB is expected to under-perform the Embracer Group. In addition to that, Gaming Corps is 2.06 times more volatile than Embracer Group AB. It trades about -0.08 of its total potential returns per unit of risk. Embracer Group AB is currently generating about 0.15 per unit of volatility. If you would invest  2,553  in Embracer Group AB on September 17, 2024 and sell it today you would earn a total of  703.00  from holding Embracer Group AB or generate 27.54% return on investment over 90 days.

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

Gaming Corps AB  vs.  Embracer Group AB

Gaming Corps AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaming Corps AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Embracer Group AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embracer Group AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Embracer Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gaming Corps and Embracer Group

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

The idea behind Gaming Corps AB and Embracer Group AB 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.