Correlation Between New Residential and GungHo Online
Can any of the company-specific risk be diversified away by investing in both New Residential and GungHo Online 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 New Residential and GungHo Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and GungHo Online Entertainment, you can compare the effects of market volatilities on New Residential and GungHo Online 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 New Residential with a short position of GungHo Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and GungHo Online.
Diversification Opportunities for New Residential and GungHo Online
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and GungHo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and GungHo Online Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GungHo Online Entert and New Residential 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 New Residential Investment are associated (or correlated) with GungHo Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GungHo Online Entert has no effect on the direction of New Residential i.e., New Residential and GungHo Online go up and down completely randomly.
Pair Corralation between New Residential and GungHo Online
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.52 times more return on investment than GungHo Online. However, New Residential Investment is 1.94 times less risky than GungHo Online. It trades about 0.25 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about -0.2 per unit of risk. If you would invest 990.00 in New Residential Investment on August 31, 2024 and sell it today you would earn a total of 62.00 from holding New Residential Investment or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Residential Investment vs. GungHo Online Entertainment
Performance |
| Timeline |
| New Residential Inve |
| GungHo Online Entert |
New Residential and GungHo Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and GungHo Online
The main advantage of trading using opposite New Residential and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, GungHo Online 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 GungHo Online will offset losses from the drop in GungHo Online's long position.| New Residential vs. MGIC INVESTMENT | New Residential vs. Perseus Mining Limited | New Residential vs. GRIFFIN MINING LTD | New Residential vs. ECHO INVESTMENT ZY |
| GungHo Online vs. CPU SOFTWAREHOUSE | GungHo Online vs. Singapore Telecommunications Limited | GungHo Online vs. Iridium Communications | GungHo Online vs. Alfa Financial Software |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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