Correlation Between Take Two and Software Circle

Can any of the company-specific risk be diversified away by investing in both Take Two and Software Circle 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 Take Two and Software Circle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Take Two Interactive Software and Software Circle plc, you can compare the effects of market volatilities on Take Two and Software Circle 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 Take Two with a short position of Software Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Software Circle.

Diversification Opportunities for Take Two and Software Circle

0.57

Correlation Coefficient

Take Two  Software Circle

Very weak diversification

The 3 months correlation between Take and Software is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Software Circle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Circle plc and Take Two 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 Take Two Interactive Software are associated (or correlated) with Software Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Circle plc has no effect on the direction of Take Two i.e., Take Two and Software Circle go up and down completely randomly.

Pair Corralation between Take Two and Software Circle

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.79 times more return on investment than Software Circle. However, Take Two Interactive Software is 1.27 times less risky than Software Circle. It trades about 0.0 of its potential returns per unit of risk. Software Circle plc is currently generating about -0.01 per unit of risk. If you would invest  23,363  in Take Two Interactive Software on May 18, 2025 and sell it today you would lose (134.00) from holding Take Two Interactive Software or give up 0.57% of portfolio value over 90 days.

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

Take Two Interactive Software  vs.  Software Circle plc

Take Two Interactive

Risk-Adjusted Performance

Weakest

Over the last 90 days Take Two Interactive Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Take Two is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Software Circle plc

Risk-Adjusted Performance

Weakest

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

Pair Trading with Take Two and Software Circle

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

The idea behind Take Two Interactive Software and Software Circle plc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.