Correlation Between GD Culture and GameOn Entertainment

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

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

Diversification Opportunities for GD Culture and GameOn Entertainment

0.63

Correlation Coefficient

GD Culture  GameOn Entertainment

Poor diversification

The 3 months correlation between GDC and GameOn is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GD Culture Group and GameOn Entertainment Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameOn Entertainment and GD Culture 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 GD Culture Group are associated (or correlated) with GameOn Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameOn Entertainment has no effect on the direction of GD Culture i.e., GD Culture and GameOn Entertainment go up and down completely randomly.

Pair Corralation between GD Culture and GameOn Entertainment

Considering the 90-day investment horizon GD Culture Group is expected to under-perform the GameOn Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, GD Culture Group is 2.17 times less risky than GameOn Entertainment. The stock trades about -0.13 of its potential returns per unit of risk. The GameOn Entertainment Technologies is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4.48  in GameOn Entertainment Technologies on September 4, 2024 and sell it today you would lose (3.60) from holding GameOn Entertainment Technologies or give up 80.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

GD Culture Group  vs.  GameOn Entertainment Technolog

GD Culture Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GD Culture Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GameOn Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GameOn Entertainment Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GD Culture and GameOn Entertainment

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

The idea behind GD Culture Group and GameOn Entertainment Technologies 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.