Correlation Between Electronic Arts and GungHo Online
Can any of the company-specific risk be diversified away by investing in both Electronic Arts 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 Electronic Arts and GungHo Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic Arts and GungHo Online Entertainment, you can compare the effects of market volatilities on Electronic Arts 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 Electronic Arts with a short position of GungHo Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Arts and GungHo Online.
Diversification Opportunities for Electronic Arts and GungHo Online
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electronic and GungHo is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts 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 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 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 Electronic Arts i.e., Electronic Arts and GungHo Online go up and down completely randomly.
Pair Corralation between Electronic Arts and GungHo Online
Assuming the 90 days horizon Electronic Arts is expected to under-perform the GungHo Online. But the stock apears to be less risky and, when comparing its historical volatility, Electronic Arts is 1.54 times less risky than GungHo Online. The stock trades about -0.38 of its potential returns per unit of risk. The GungHo Online Entertainment is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,810 in GungHo Online Entertainment on September 22, 2024 and sell it today you would earn a total of 210.00 from holding GungHo Online Entertainment or generate 11.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic Arts vs. GungHo Online Entertainment
Performance |
| Timeline |
| Electronic Arts |
| GungHo Online Entert |
Electronic Arts and GungHo Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic Arts and GungHo Online
The main advantage of trading using opposite Electronic Arts and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic Arts 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.| Electronic Arts vs. NEXON Co | Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Superior Plus Corp | Electronic Arts vs. SIVERS SEMICONDUCTORS AB |
| GungHo Online vs. Nintendo Co | GungHo Online vs. Nintendo Co | GungHo Online vs. Sea Limited | GungHo Online vs. Electronic Arts |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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