Correlation Between GAMES OPERATORS and BOVIS HOMES

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

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

Diversification Opportunities for GAMES OPERATORS and BOVIS HOMES

0.28

Correlation Coefficient

GAMES OPERATORS  BOVIS HOMES

Modest diversification

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

Pair Corralation between GAMES OPERATORS and BOVIS HOMES

Assuming the 90 days horizon GAMES OPERATORS SA is expected to generate 0.53 times more return on investment than BOVIS HOMES. However, GAMES OPERATORS SA is 1.88 times less risky than BOVIS HOMES. It trades about -0.13 of its potential returns per unit of risk. BOVIS HOMES GROUP is currently generating about -0.08 per unit of risk. If you would invest  408.00  in GAMES OPERATORS SA on January 12, 2025 and sell it today you would lose (34.00) from holding GAMES OPERATORS SA or give up 8.33% of portfolio value over 90 days.

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

GAMES OPERATORS SA  vs.  BOVIS HOMES GROUP

GAMES OPERATORS SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GAMES OPERATORS SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GAMES OPERATORS reported solid returns over the last few months and may actually be approaching a breakup point.

BOVIS HOMES GROUP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BOVIS HOMES GROUP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, BOVIS HOMES may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with GAMES OPERATORS and BOVIS HOMES

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

The idea behind GAMES OPERATORS SA and BOVIS HOMES 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.

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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.