Correlation Between Electronic Arts and SohuCom
Can any of the company-specific risk be diversified away by investing in both Electronic Arts and SohuCom 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 Electronic Arts and SohuCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and SohuCom, you can compare the effects of market volatilities on Electronic Arts and SohuCom 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 Electronic Arts with a short position of SohuCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and SohuCom.
Diversification Opportunities for Electronic Arts and SohuCom
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Electronic and SohuCom is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and SohuCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SohuCom and Electronic Arts 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 Electronic Arts are associated (or correlated) with SohuCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SohuCom has no effect on the direction of Electronic Arts i.e., Electronic Arts and SohuCom go up and down completely randomly.
Pair Corralation between Electronic Arts and SohuCom
Allowing for the 90-day total investment horizon Electronic Arts is expected to generate 0.46 times more return on investment than SohuCom. However, Electronic Arts is 2.18 times less risky than SohuCom. It trades about 0.18 of its potential returns per unit of risk. SohuCom is currently generating about -0.14 per unit of risk. If you would invest 14,837 in Electronic Arts on August 24, 2024 and sell it today you would earn a total of 1,960 from holding Electronic Arts or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. SohuCom
Performance |
| Timeline |
| Electronic Arts |
| SohuCom |
Electronic Arts and SohuCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and SohuCom
The main advantage of trading using opposite Electronic Arts and SohuCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts position performs unexpectedly, SohuCom 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 SohuCom will offset losses from the drop in SohuCom's long position.| Electronic Arts vs. Nintendo Co ADR | Electronic Arts vs. Roblox Corp | Electronic Arts vs. NetEase | Electronic Arts vs. Take Two Interactive Software |
| SohuCom vs. Snail, Class A | SohuCom vs. Playstudios | SohuCom vs. Playtika Holding Corp | SohuCom vs. Doubledown Interactive Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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