Correlation Between WI LAN and GungHo Online

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

Diversification Opportunities for WI LAN and GungHo Online

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between WJL and GungHo is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding WI LAN 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 WI LAN 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 WI LAN 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 WI LAN i.e., WI LAN and GungHo Online go up and down completely randomly.

Pair Corralation between WI LAN and GungHo Online

Assuming the 90 days trading horizon WI LAN is expected to generate 1.32 times more return on investment than GungHo Online. However, WI LAN is 1.32 times more volatile than GungHo Online Entertainment. It trades about 0.18 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about -0.15 per unit of risk. If you would invest  103.00  in WI LAN on September 13, 2024 and sell it today you would earn a total of  13.00  from holding WI LAN or generate 12.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

WI LAN  vs.  GungHo Online Entertainment

 Performance 
       Timeline  
WI LAN 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in WI LAN are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, WI LAN may actually be approaching a critical reversion point that can send shares even higher in January 2025.
GungHo Online Entert 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GungHo Online Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GungHo Online is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

WI LAN and GungHo Online Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WI LAN and GungHo Online

The main advantage of trading using opposite WI LAN and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WI LAN 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 WI LAN 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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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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