Correlation Between Gaming Factory and CD PROJEKT

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Can any of the company-specific risk be diversified away by investing in both Gaming Factory and CD PROJEKT 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 Factory and CD PROJEKT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Factory SA and CD PROJEKT SA, you can compare the effects of market volatilities on Gaming Factory and CD PROJEKT 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 Factory with a short position of CD PROJEKT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Factory and CD PROJEKT.

Diversification Opportunities for Gaming Factory and CD PROJEKT

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Gaming and CDR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Factory SA and CD PROJEKT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD PROJEKT SA and Gaming Factory 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 Factory SA are associated (or correlated) with CD PROJEKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD PROJEKT SA has no effect on the direction of Gaming Factory i.e., Gaming Factory and CD PROJEKT go up and down completely randomly.

Pair Corralation between Gaming Factory and CD PROJEKT

Assuming the 90 days trading horizon Gaming Factory SA is expected to under-perform the CD PROJEKT. In addition to that, Gaming Factory is 1.62 times more volatile than CD PROJEKT SA. It trades about -0.08 of its total potential returns per unit of risk. CD PROJEKT SA is currently generating about 0.08 per unit of volatility. If you would invest  17,415  in CD PROJEKT SA on September 30, 2024 and sell it today you would earn a total of  1,640  from holding CD PROJEKT SA or generate 9.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Gaming Factory SA  vs.  CD PROJEKT SA

 Performance 
       Timeline  
Gaming Factory SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Gaming Factory SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
CD PROJEKT SA 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in CD PROJEKT SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CD PROJEKT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gaming Factory and CD PROJEKT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gaming Factory and CD PROJEKT

The main advantage of trading using opposite Gaming Factory and CD PROJEKT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Factory position performs unexpectedly, CD PROJEKT 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 CD PROJEKT will offset losses from the drop in CD PROJEKT's long position.
The idea behind Gaming Factory SA and CD PROJEKT SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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