Correlation Between MW Trade and Live Motion
Can any of the company-specific risk be diversified away by investing in both MW Trade and Live Motion 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 MW Trade and Live Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MW Trade SA and Live Motion Games, you can compare the effects of market volatilities on MW Trade and Live Motion 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 MW Trade with a short position of Live Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of MW Trade and Live Motion.
Diversification Opportunities for MW Trade and Live Motion
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MWT and Live is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding MW Trade SA and Live Motion Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Motion Games and MW Trade 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 MW Trade SA are associated (or correlated) with Live Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Motion Games has no effect on the direction of MW Trade i.e., MW Trade and Live Motion go up and down completely randomly.
Pair Corralation between MW Trade and Live Motion
Assuming the 90 days trading horizon MW Trade SA is expected to generate 0.8 times more return on investment than Live Motion. However, MW Trade SA is 1.25 times less risky than Live Motion. It trades about -0.2 of its potential returns per unit of risk. Live Motion Games is currently generating about -0.3 per unit of risk. If you would invest 480.00 in MW Trade SA on September 10, 2024 and sell it today you would lose (162.00) from holding MW Trade SA or give up 33.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 92.06% |
Values | Daily Returns |
MW Trade SA vs. Live Motion Games
Performance |
Timeline |
MW Trade SA |
Live Motion Games |
MW Trade and Live Motion Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MW Trade and Live Motion
The main advantage of trading using opposite MW Trade and Live Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MW Trade position performs unexpectedly, Live Motion 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 Live Motion will offset losses from the drop in Live Motion's long position.MW Trade vs. Poznanska Korporacja Budowlana | MW Trade vs. Esotiq Henderson SA | MW Trade vs. Toya SA | MW Trade vs. Betacom SA |
Live Motion vs. Ice Code Games | Live Motion vs. Gamedust SA | Live Motion vs. 3R Games SA | Live Motion vs. Baked Games SA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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