Correlation Between Gaming Realms and CVR Energy

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

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

Diversification Opportunities for Gaming Realms and CVR Energy

-0.16

Correlation Coefficient

Gaming Realms  CVR Energy

Good diversification

The 3 months correlation between Gaming and CVR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and Gaming Realms 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 Realms plc are associated (or correlated) with CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of Gaming Realms i.e., Gaming Realms and CVR Energy go up and down completely randomly.

Pair Corralation between Gaming Realms and CVR Energy

Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 0.69 times more return on investment than CVR Energy. However, Gaming Realms plc is 1.44 times less risky than CVR Energy. It trades about -0.03 of its potential returns per unit of risk. CVR Energy is currently generating about -0.06 per unit of risk. If you would invest  4,000  in Gaming Realms plc on September 2, 2024 and sell it today you would lose (310.00) from holding Gaming Realms plc or give up 7.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Gaming Realms plc  vs.  CVR Energy

Gaming Realms plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaming Realms plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Gaming Realms is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Pair Trading with Gaming Realms and CVR Energy

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

The idea behind Gaming Realms plc and CVR Energy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.