Correlation Between RATIONAL UNADR and CI GAMES

Can any of the company-specific risk be diversified away by investing in both RATIONAL UNADR and CI GAMES 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 RATIONAL UNADR and CI GAMES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RATIONAL UNADR 1 and CI GAMES SA, you can compare the effects of market volatilities on RATIONAL UNADR and CI GAMES 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 RATIONAL UNADR with a short position of CI GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of RATIONAL UNADR and CI GAMES.

Diversification Opportunities for RATIONAL UNADR and CI GAMES

0.46

Correlation Coefficient

RATIONAL UNADR  CI GAMES

Very weak diversification

The 3 months correlation between RATIONAL and CI7 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding RATIONAL UNADR 1 and CI GAMES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI GAMES SA and RATIONAL UNADR 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 RATIONAL UNADR 1 are associated (or correlated) with CI GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI GAMES SA has no effect on the direction of RATIONAL UNADR i.e., RATIONAL UNADR and CI GAMES go up and down completely randomly.

Pair Corralation between RATIONAL UNADR and CI GAMES

Assuming the 90 days trading horizon RATIONAL UNADR 1 is expected to generate 0.36 times more return on investment than CI GAMES. However, RATIONAL UNADR 1 is 2.78 times less risky than CI GAMES. It trades about 0.06 of its potential returns per unit of risk. CI GAMES SA is currently generating about 0.01 per unit of risk. If you would invest  2,550  in RATIONAL UNADR 1 on September 9, 2024 and sell it today you would earn a total of  1,830  from holding RATIONAL UNADR 1 or generate 71.76% return on investment over 90 days.

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

RATIONAL UNADR 1  vs.  CI GAMES SA

RATIONAL UNADR 1

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RATIONAL UNADR 1 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RATIONAL UNADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

CI GAMES SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI GAMES SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CI GAMES is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RATIONAL UNADR and CI GAMES

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

The idea behind RATIONAL UNADR 1 and CI GAMES 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.