Correlation Between Gravity and Activision Blizzard

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

By analyzing existing cross correlation between Gravity Co and Activision Blizzard, you can compare the effects of market volatilities on Gravity and Activision Blizzard 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 Gravity with a short position of Activision Blizzard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gravity and Activision Blizzard.

Diversification Opportunities for Gravity and Activision Blizzard

0.53

Correlation Coefficient

Gravity  Activision Blizzard

Very weak diversification

The 3 months correlation between Gravity and Activision is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gravity Co and Activision Blizzard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Activision Blizzard and Gravity 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 Gravity Co are associated (or correlated) with Activision Blizzard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Activision Blizzard has no effect on the direction of Gravity i.e., Gravity and Activision Blizzard go up and down completely randomly.

Pair Corralation between Gravity and Activision Blizzard

If you would invest  9,255  in Activision Blizzard on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Activision Blizzard or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Gravity Co  vs.  Activision Blizzard

Gravity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gravity Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Gravity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Activision Blizzard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Activision Blizzard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Activision Blizzard is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Gravity and Activision Blizzard

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

The idea behind Gravity Co and Activision Blizzard 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.