Correlation Between Western Digital and GameOn Entertainment

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

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

Diversification Opportunities for Western Digital and GameOn Entertainment

-0.41

Correlation Coefficient

Western Digital  GameOn Entertainment

Very good diversification

The 3 months correlation between Western and GameOn is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and GameOn Entertainment Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameOn Entertainment and Western Digital 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 Western Digital 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 Western Digital i.e., Western Digital and GameOn Entertainment go up and down completely randomly.

Pair Corralation between Western Digital and GameOn Entertainment

Considering the 90-day investment horizon Western Digital is expected to generate 0.1 times more return on investment than GameOn Entertainment. However, Western Digital is 9.69 times less risky than GameOn Entertainment. It trades about 0.11 of its potential returns per unit of risk. GameOn Entertainment Technologies is currently generating about -0.03 per unit of risk. If you would invest  6,261  in Western Digital on September 5, 2024 and sell it today you would earn a total of  908.00  from holding Western Digital or generate 14.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Western Digital  vs.  GameOn Entertainment Technolog

Western Digital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Western Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Western Digital and GameOn Entertainment

The main advantage of trading using opposite Western Digital and GameOn Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital 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 Western Digital 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.