Correlation Between DAX Index and GungHo Online

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Can any of the company-specific risk be diversified away by investing in both DAX Index 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 DAX Index and GungHo Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAX Index and GungHo Online Entertainment, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of GungHo Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and GungHo Online.

Diversification Opportunities for DAX Index and GungHo Online

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between DAX and GungHo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index 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 DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and GungHo Online go up and down completely randomly.
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Pair Corralation between DAX Index and GungHo Online

Assuming the 90 days trading horizon DAX Index is expected to generate 0.41 times more return on investment than GungHo Online. However, DAX Index is 2.46 times less risky than GungHo Online. It trades about -0.03 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about -0.11 per unit of risk. If you would invest  1,953,162  in DAX Index on August 28, 2024 and sell it today you would lose (12,642) from holding DAX Index or give up 0.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

DAX Index  vs.  GungHo Online Entertainment

 Performance 
       Timeline  

DAX Index and GungHo Online Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DAX Index and GungHo Online

The main advantage of trading using opposite DAX Index and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.
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The idea behind DAX Index and GungHo Online Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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