Correlation Between Capcom Co and Nintendo
Can any of the company-specific risk be diversified away by investing in both Capcom Co and Nintendo 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 Capcom Co and Nintendo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capcom Co and Nintendo Co, you can compare the effects of market volatilities on Capcom Co and Nintendo 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 Capcom Co with a short position of Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capcom Co and Nintendo.
Diversification Opportunities for Capcom Co and Nintendo
Good diversification
The 3 months correlation between Capcom and Nintendo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Capcom Co and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo and Capcom Co 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 Capcom Co are associated (or correlated) with Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of Capcom Co i.e., Capcom Co and Nintendo go up and down completely randomly.
Pair Corralation between Capcom Co and Nintendo
Assuming the 90 days horizon Capcom Co is expected to generate 11.55 times more return on investment than Nintendo. However, Capcom Co is 11.55 times more volatile than Nintendo Co. It trades about 0.09 of its potential returns per unit of risk. Nintendo Co is currently generating about 0.04 per unit of risk. If you would invest 3,076 in Capcom Co on August 28, 2024 and sell it today you would lose (1,022) from holding Capcom Co or give up 33.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.11% |
| Values | Daily Returns |
Capcom Co vs. Nintendo Co
Performance |
| Timeline |
| Capcom Co |
| Nintendo |
Capcom Co and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capcom Co and Nintendo
The main advantage of trading using opposite Capcom Co and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capcom Co position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.| Capcom Co vs. Square Enix Holdings | Capcom Co vs. CD Projekt SA | Capcom Co vs. Sega Sammy Holdings | Capcom Co vs. Square Enix Holdings |
| Nintendo vs. GDEV Inc | Nintendo vs. Doubledown Interactive Co | Nintendo vs. Playstudios | Nintendo vs. SohuCom |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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