Correlation Between BOVIS HOMES and Forgame Holdings

Can any of the company-specific risk be diversified away by investing in both BOVIS HOMES and Forgame Holdings 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 BOVIS HOMES and Forgame Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BOVIS HOMES GROUP and Forgame Holdings, you can compare the effects of market volatilities on BOVIS HOMES and Forgame Holdings 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 BOVIS HOMES with a short position of Forgame Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOVIS HOMES and Forgame Holdings.

Diversification Opportunities for BOVIS HOMES and Forgame Holdings

0.28

Correlation Coefficient

BOVIS HOMES  Forgame Holdings

Modest diversification

The 3 months correlation between BOVIS and Forgame is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BOVIS HOMES GROUP and Forgame Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forgame Holdings and BOVIS HOMES 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 BOVIS HOMES GROUP are associated (or correlated) with Forgame Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forgame Holdings has no effect on the direction of BOVIS HOMES i.e., BOVIS HOMES and Forgame Holdings go up and down completely randomly.

Pair Corralation between BOVIS HOMES and Forgame Holdings

Assuming the 90 days trading horizon BOVIS HOMES GROUP is expected to generate 0.78 times more return on investment than Forgame Holdings. However, BOVIS HOMES GROUP is 1.27 times less risky than Forgame Holdings. It trades about 0.03 of its potential returns per unit of risk. Forgame Holdings is currently generating about -0.03 per unit of risk. If you would invest  673.00  in BOVIS HOMES GROUP on January 5, 2025 and sell it today you would earn a total of  14.00  from holding BOVIS HOMES GROUP or generate 2.08% return on investment over 90 days.

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

BOVIS HOMES GROUP  vs.  Forgame Holdings

BOVIS HOMES GROUP

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BOVIS HOMES GROUP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, BOVIS HOMES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Forgame Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forgame Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BOVIS HOMES and Forgame Holdings

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

The idea behind BOVIS HOMES GROUP and Forgame Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.