Correlation Between Big Rock and Gamehost

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

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

Diversification Opportunities for Big Rock and Gamehost

-0.1

Correlation Coefficient

Big Rock  Gamehost

Good diversification

The 3 months correlation between Big and Gamehost is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and Gamehost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamehost and Big Rock 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 Big Rock Brewery are associated (or correlated) with Gamehost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamehost has no effect on the direction of Big Rock i.e., Big Rock and Gamehost go up and down completely randomly.

Pair Corralation between Big Rock and Gamehost

Assuming the 90 days horizon Big Rock is expected to generate 10.66 times less return on investment than Gamehost. In addition to that, Big Rock is 4.58 times more volatile than Gamehost. It trades about 0.01 of its total potential returns per unit of risk. Gamehost is currently generating about 0.42 per unit of volatility. If you would invest  980.00  in Gamehost on April 23, 2025 and sell it today you would earn a total of  250.00  from holding Gamehost or generate 25.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Big Rock Brewery  vs.  Gamehost

Big Rock Brewery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Rock Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Big Rock is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Gamehost

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Gamehost are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Gamehost displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Big Rock and Gamehost

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

The idea behind Big Rock Brewery and Gamehost 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.