Correlation Between Retail Estates and FRACTAL GAMING

Can any of the company-specific risk be diversified away by investing in both Retail Estates and FRACTAL GAMING 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 Retail Estates and FRACTAL GAMING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Retail Estates NV and FRACTAL GAMING GROUP, you can compare the effects of market volatilities on Retail Estates and FRACTAL GAMING 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 Retail Estates with a short position of FRACTAL GAMING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and FRACTAL GAMING.

Diversification Opportunities for Retail Estates and FRACTAL GAMING

0.84

Correlation Coefficient

Retail Estates  FRACTAL GAMING

Very poor diversification

The 3 months correlation between Retail and FRACTAL is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and FRACTAL GAMING GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FRACTAL GAMING GROUP and Retail Estates 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 Retail Estates NV are associated (or correlated) with FRACTAL GAMING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FRACTAL GAMING GROUP has no effect on the direction of Retail Estates i.e., Retail Estates and FRACTAL GAMING go up and down completely randomly.

Pair Corralation between Retail Estates and FRACTAL GAMING

Assuming the 90 days horizon Retail Estates NV is expected to under-perform the FRACTAL GAMING. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 1.28 times less risky than FRACTAL GAMING. The stock trades about -0.26 of its potential returns per unit of risk. The FRACTAL GAMING GROUP is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  292.00  in FRACTAL GAMING GROUP on September 12, 2024 and sell it today you would lose (22.00) from holding FRACTAL GAMING GROUP or give up 7.53% of portfolio value over 90 days.

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

Retail Estates NV  vs.  FRACTAL GAMING GROUP

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV 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.

FRACTAL GAMING GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FRACTAL GAMING GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Retail Estates and FRACTAL GAMING

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

The idea behind Retail Estates NV and FRACTAL GAMING GROUP 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.