Correlation Between GungHo Online and Pearson Plc
Can any of the company-specific risk be diversified away by investing in both GungHo Online and Pearson Plc 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 Pearson Plc 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 Pearson plc, you can compare the effects of market volatilities on GungHo Online and Pearson Plc 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 Pearson Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of GungHo Online and Pearson Plc.
Diversification Opportunities for GungHo Online and Pearson Plc
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between GungHo and Pearson is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding GungHo Online Entertainment and Pearson plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearson plc 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 Pearson Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearson plc has no effect on the direction of GungHo Online i.e., GungHo Online and Pearson Plc go up and down completely randomly.
Pair Corralation between GungHo Online and Pearson Plc
Assuming the 90 days horizon GungHo Online is expected to generate 1.33 times less return on investment than Pearson Plc. In addition to that, GungHo Online is 1.56 times more volatile than Pearson plc. It trades about 0.03 of its total potential returns per unit of risk. Pearson plc is currently generating about 0.07 per unit of volatility. If you would invest 993.00 in Pearson plc on September 13, 2024 and sell it today you would earn a total of 487.00 from holding Pearson plc or generate 49.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
GungHo Online Entertainment vs. Pearson plc
Performance |
| Timeline |
| GungHo Online Entert |
| Pearson plc |
GungHo Online and Pearson Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GungHo Online and Pearson Plc
The main advantage of trading using opposite GungHo Online and Pearson Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GungHo Online position performs unexpectedly, Pearson Plc 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 Pearson Plc will offset losses from the drop in Pearson Plc's long position.| GungHo Online vs. Infrastrutture Wireless Italiane | GungHo Online vs. CENTURIA OFFICE REIT | GungHo Online vs. MAVEN WIRELESS SWEDEN | GungHo Online vs. CITY OFFICE REIT |
| Pearson Plc vs. FLOW TRADERS LTD | Pearson Plc vs. FAST RETAIL ADR | Pearson Plc vs. CarsalesCom | Pearson Plc vs. GungHo Online Entertainment |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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