Correlation Between GD Culture and NetEase
Can any of the company-specific risk be diversified away by investing in both GD Culture and NetEase 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 GD Culture and NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GD Culture Group and NetEase, you can compare the effects of market volatilities on GD Culture and NetEase 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 GD Culture with a short position of NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of GD Culture and NetEase.
Diversification Opportunities for GD Culture and NetEase
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between GDC and NetEase is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding GD Culture Group and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and GD Culture 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 GD Culture Group are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of GD Culture i.e., GD Culture and NetEase go up and down completely randomly.
Pair Corralation between GD Culture and NetEase
Considering the 90-day investment horizon GD Culture Group is expected to under-perform the NetEase. In addition to that, GD Culture is 1.54 times more volatile than NetEase. It trades about -0.46 of its total potential returns per unit of risk. NetEase is currently generating about 0.3 per unit of volatility. If you would invest 8,822 in NetEase on November 7, 2024 and sell it today you would earn a total of 1,463 from holding NetEase or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
GD Culture Group vs. NetEase
Performance |
| Timeline |
| GD Culture Group |
| NetEase |
GD Culture and NetEase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GD Culture and NetEase
The main advantage of trading using opposite GD Culture and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GD Culture position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.| GD Culture vs. Blue Hat Interactive | GD Culture vs. Playstudios | GD Culture vs. Motorsport Gaming Us | GD Culture vs. Alpha Esports Tech |
| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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