Correlation Between SohuCom and Nintendo
Can any of the company-specific risk be diversified away by investing in both SohuCom and Nintendo 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 SohuCom and Nintendo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SohuCom and Nintendo Co, you can compare the effects of market volatilities on SohuCom and Nintendo 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 SohuCom with a short position of Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of SohuCom and Nintendo.
Diversification Opportunities for SohuCom and Nintendo
Average diversification
The 3 months correlation between SohuCom and Nintendo is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SohuCom and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo and SohuCom 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 SohuCom are associated (or correlated) with Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of SohuCom i.e., SohuCom and Nintendo go up and down completely randomly.
Pair Corralation between SohuCom and Nintendo
Given the investment horizon of 90 days SohuCom is expected to generate 0.86 times more return on investment than Nintendo. However, SohuCom is 1.16 times less risky than Nintendo. It trades about 0.08 of its potential returns per unit of risk. Nintendo Co is currently generating about 0.02 per unit of risk. If you would invest 951.00 in SohuCom on September 1, 2024 and sell it today you would earn a total of 350.00 from holding SohuCom or generate 36.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SohuCom vs. Nintendo Co
Performance |
| Timeline |
| SohuCom |
| Nintendo |
SohuCom and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SohuCom and Nintendo
The main advantage of trading using opposite SohuCom and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SohuCom position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.| SohuCom vs. Snail, Class A | SohuCom vs. Playstudios | SohuCom vs. Playtika Holding Corp | SohuCom vs. Doubledown Interactive Co |
| Nintendo vs. CD Projekt SA | Nintendo vs. Sega Sammy Holdings | Nintendo vs. Playtika Holding Corp | Nintendo vs. Square Enix Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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