Correlation Between GameSquare Holdings and NetEase

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Can any of the company-specific risk be diversified away by investing in both GameSquare Holdings and NetEase 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 GameSquare Holdings and NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameSquare Holdings and NetEase, you can compare the effects of market volatilities on GameSquare Holdings and NetEase 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 GameSquare Holdings with a short position of NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameSquare Holdings and NetEase.

Diversification Opportunities for GameSquare Holdings and NetEase

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between GameSquare and NetEase is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding GameSquare Holdings and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and GameSquare Holdings 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 GameSquare Holdings are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of GameSquare Holdings i.e., GameSquare Holdings and NetEase go up and down completely randomly.

Pair Corralation between GameSquare Holdings and NetEase

Given the investment horizon of 90 days GameSquare Holdings is expected to generate 4.73 times more return on investment than NetEase. However, GameSquare Holdings is 4.73 times more volatile than NetEase. It trades about 0.09 of its potential returns per unit of risk. NetEase is currently generating about -0.27 per unit of risk. If you would invest  136.00  in GameSquare Holdings on January 22, 2024 and sell it today you would earn a total of  12.00  from holding GameSquare Holdings or generate 8.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

GameSquare Holdings  vs.  NetEase

 Performance 
       Timeline  
GameSquare Holdings 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in GameSquare Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, GameSquare Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.
NetEase 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, NetEase is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

GameSquare Holdings and NetEase Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GameSquare Holdings and NetEase

The main advantage of trading using opposite GameSquare Holdings and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameSquare Holdings position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.
The idea behind GameSquare Holdings and NetEase 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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