Correlation Between GungHo Online and Tencent Music
Can any of the company-specific risk be diversified away by investing in both GungHo Online and Tencent Music 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 GungHo Online and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GungHo Online Entertainment and Tencent Music Entertainment, you can compare the effects of market volatilities on GungHo Online and Tencent Music 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 GungHo Online with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of GungHo Online and Tencent Music.
Diversification Opportunities for GungHo Online and Tencent Music
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between GungHo and Tencent is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding GungHo Online Entertainment and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert and GungHo Online 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 GungHo Online Entertainment are associated (or correlated) with Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of GungHo Online i.e., GungHo Online and Tencent Music go up and down completely randomly.
Pair Corralation between GungHo Online and Tencent Music
Assuming the 90 days horizon GungHo Online Entertainment is expected to generate 0.63 times more return on investment than Tencent Music. However, GungHo Online Entertainment is 1.59 times less risky than Tencent Music. It trades about 0.08 of its potential returns per unit of risk. Tencent Music Entertainment is currently generating about 0.01 per unit of risk. If you would invest 1,610 in GungHo Online Entertainment on November 3, 2024 and sell it today you would earn a total of 360.00 from holding GungHo Online Entertainment or generate 22.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GungHo Online Entertainment vs. Tencent Music Entertainment
Performance |
| Timeline |
| GungHo Online Entert |
| Tencent Music Entert |
GungHo Online and Tencent Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GungHo Online and Tencent Music
The main advantage of trading using opposite GungHo Online and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GungHo Online position performs unexpectedly, Tencent Music 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 Tencent Music will offset losses from the drop in Tencent Music's long position.| GungHo Online vs. ONWARD MEDICAL BV | GungHo Online vs. CNVISION MEDIA | GungHo Online vs. MeVis Medical Solutions | GungHo Online vs. ANTA SPORTS PRODUCT |
| Tencent Music vs. GRIFFIN MINING LTD | Tencent Music vs. DISTRICT METALS | Tencent Music vs. GREENX METALS LTD | Tencent Music vs. Stag Industrial |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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