Correlation Between China Overseas and GungHo Online
Can any of the company-specific risk be diversified away by investing in both China Overseas 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 China Overseas and GungHo Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Overseas Land and GungHo Online Entertainment, you can compare the effects of market volatilities on China Overseas 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 China Overseas with a short position of GungHo Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and GungHo Online.
Diversification Opportunities for China Overseas and GungHo Online
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and GungHo is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land 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 China Overseas 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 China Overseas Land 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 China Overseas i.e., China Overseas and GungHo Online go up and down completely randomly.
Pair Corralation between China Overseas and GungHo Online
Assuming the 90 days horizon China Overseas Land is expected to generate 2.1 times more return on investment than GungHo Online. However, China Overseas is 2.1 times more volatile than GungHo Online Entertainment. It trades about 0.08 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about 0.08 per unit of risk. If you would invest 110.00 in China Overseas Land on November 3, 2024 and sell it today you would earn a total of 40.00 from holding China Overseas Land or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Overseas Land vs. GungHo Online Entertainment
Performance |
| Timeline |
| China Overseas Land |
| GungHo Online Entert |
China Overseas and GungHo Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Overseas and GungHo Online
The main advantage of trading using opposite China Overseas and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Overseas 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.| China Overseas vs. Penn National Gaming | China Overseas vs. FRACTAL GAMING GROUP | China Overseas vs. PURETECH HEALTH PLC | China Overseas vs. Media and Games |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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