Correlation Between GungHo Online and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both GungHo Online and Goodyear Tire 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 Goodyear Tire 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 Goodyear Tire Rubber, you can compare the effects of market volatilities on GungHo Online and Goodyear Tire 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 Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of GungHo Online and Goodyear Tire.
Diversification Opportunities for GungHo Online and Goodyear Tire
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GungHo and Goodyear is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding GungHo Online Entertainment and Goodyear Tire Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire Rubber 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 Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire Rubber has no effect on the direction of GungHo Online i.e., GungHo Online and Goodyear Tire go up and down completely randomly.
Pair Corralation between GungHo Online and Goodyear Tire
Assuming the 90 days horizon GungHo Online Entertainment is expected to generate 0.47 times more return on investment than Goodyear Tire. However, GungHo Online Entertainment is 2.12 times less risky than Goodyear Tire. It trades about 0.07 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.02 per unit of risk. If you would invest 1,840 in GungHo Online Entertainment on September 19, 2024 and sell it today you would earn a total of 40.00 from holding GungHo Online Entertainment or generate 2.17% 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. Goodyear Tire Rubber
Performance |
| Timeline |
| GungHo Online Entert |
| Goodyear Tire Rubber |
GungHo Online and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GungHo Online and Goodyear Tire
The main advantage of trading using opposite GungHo Online and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GungHo Online position performs unexpectedly, Goodyear Tire 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 Goodyear Tire will offset losses from the drop in Goodyear Tire's long position.| GungHo Online vs. NEXON Co | GungHo Online vs. Take Two Interactive Software | GungHo Online vs. Superior Plus Corp | GungHo Online vs. SIVERS SEMICONDUCTORS AB |
| Goodyear Tire vs. Carsales | Goodyear Tire vs. SALESFORCE INC CDR | Goodyear Tire vs. GungHo Online Entertainment | Goodyear Tire vs. Iridium Communications |
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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