Correlation Between Methode Electronics and GungHo Online
Can any of the company-specific risk be diversified away by investing in both Methode Electronics 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 Methode Electronics and GungHo Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and GungHo Online Entertainment, you can compare the effects of market volatilities on Methode Electronics 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 Methode Electronics with a short position of GungHo Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and GungHo Online.
Diversification Opportunities for Methode Electronics and GungHo Online
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Methode and GungHo is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics 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 Methode Electronics 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 Methode Electronics 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 Methode Electronics i.e., Methode Electronics and GungHo Online go up and down completely randomly.
Pair Corralation between Methode Electronics and GungHo Online
Assuming the 90 days trading horizon Methode Electronics is expected to under-perform the GungHo Online. In addition to that, Methode Electronics is 1.89 times more volatile than GungHo Online Entertainment. It trades about -0.03 of its total potential returns per unit of risk. GungHo Online Entertainment is currently generating about 0.06 per unit of volatility. If you would invest 1,390 in GungHo Online Entertainment on September 4, 2024 and sell it today you would earn a total of 450.00 from holding GungHo Online Entertainment or generate 32.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. GungHo Online Entertainment
Performance |
| Timeline |
| Methode Electronics |
| GungHo Online Entert |
Methode Electronics and GungHo Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and GungHo Online
The main advantage of trading using opposite Methode Electronics and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics 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.| Methode Electronics vs. Performance Food Group | Methode Electronics vs. CN MODERN DAIRY | Methode Electronics vs. PT Indofood Sukses | Methode Electronics vs. Astral Foods Limited |
| GungHo Online vs. Nintendo Co | GungHo Online vs. Nintendo Co | GungHo Online vs. Sea Limited | GungHo Online vs. Take Two Interactive Software |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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