Correlation Between Gravity and SohuCom
Can any of the company-specific risk be diversified away by investing in both Gravity and SohuCom 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 Gravity and SohuCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gravity Co and SohuCom, you can compare the effects of market volatilities on Gravity and SohuCom 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 Gravity with a short position of SohuCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gravity and SohuCom.
Diversification Opportunities for Gravity and SohuCom
Excellent diversification
The 3 months correlation between Gravity and SohuCom is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Gravity Co and SohuCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SohuCom and Gravity 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 Gravity Co are associated (or correlated) with SohuCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SohuCom has no effect on the direction of Gravity i.e., Gravity and SohuCom go up and down completely randomly.
Pair Corralation between Gravity and SohuCom
Given the investment horizon of 90 days Gravity Co is expected to generate 0.83 times more return on investment than SohuCom. However, Gravity Co is 1.21 times less risky than SohuCom. It trades about 0.11 of its potential returns per unit of risk. SohuCom is currently generating about -0.22 per unit of risk. If you would invest 6,329 in Gravity Co on August 28, 2024 and sell it today you would earn a total of 300.00 from holding Gravity Co or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gravity Co vs. SohuCom
Performance |
| Timeline |
| Gravity |
| SohuCom |
Gravity and SohuCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gravity and SohuCom
The main advantage of trading using opposite Gravity and SohuCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gravity position performs unexpectedly, SohuCom 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 SohuCom will offset losses from the drop in SohuCom's long position.| Gravity vs. Doubledown Interactive Co | Gravity vs. Playtika Holding Corp | Gravity vs. NetEase | Gravity vs. SohuCom |
| SohuCom vs. Snail, Class A | SohuCom vs. Playstudios | SohuCom vs. Playtika Holding Corp | SohuCom vs. Doubledown Interactive Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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