Correlation Between Live Motion and True Games

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

By analyzing existing cross correlation between Live Motion Games and True Games Syndicate, you can compare the effects of market volatilities on Live Motion and True 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 Live Motion with a short position of True Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Motion and True Games.

Diversification Opportunities for Live Motion and True Games

0.66

Correlation Coefficient

Live Motion  True Games

Poor diversification

The 3 months correlation between Live and True is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Live Motion Games and True Games Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True Games Syndicate and Live Motion 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 Live Motion Games are associated (or correlated) with True Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True Games Syndicate has no effect on the direction of Live Motion i.e., Live Motion and True Games go up and down completely randomly.

Pair Corralation between Live Motion and True Games

Assuming the 90 days trading horizon Live Motion Games is expected to under-perform the True Games. But the stock apears to be less risky and, when comparing its historical volatility, Live Motion Games is 1.3 times less risky than True Games. The stock trades about -0.05 of its potential returns per unit of risk. The True Games Syndicate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  29.00  in True Games Syndicate on September 1, 2024 and sell it today you would earn a total of  18.00  from holding True Games Syndicate or generate 62.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.12%
Values	Daily Returns

Live Motion Games  vs.  True Games Syndicate

Live Motion Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Motion Games has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

True Games Syndicate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days True Games Syndicate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Live Motion and True Games

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

The idea behind Live Motion Games and True Games Syndicate 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.