Correlation Between Titan Machinery and GungHo Online

Can any of the company-specific risk be diversified away by investing in both Titan Machinery 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 Titan Machinery and GungHo Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Titan Machinery and GungHo Online Entertainment, you can compare the effects of market volatilities on Titan Machinery 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 Titan Machinery with a short position of GungHo Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and GungHo Online.

Diversification Opportunities for Titan Machinery and GungHo Online

0.43

Correlation Coefficient

Titan Machinery  GungHo Online

Very weak diversification

The 3 months correlation between Titan and GungHo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery 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 Titan Machinery 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 Titan Machinery 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 Titan Machinery i.e., Titan Machinery and GungHo Online go up and down completely randomly.

Pair Corralation between Titan Machinery and GungHo Online

Assuming the 90 days horizon Titan Machinery is expected to generate 1.74 times more return on investment than GungHo Online. However, Titan Machinery is 1.74 times more volatile than GungHo Online Entertainment. It trades about 0.11 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about -0.04 per unit of risk. If you would invest  1,310  in Titan Machinery on December 29, 2024 and sell it today you would earn a total of  340.00  from holding Titan Machinery or generate 25.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Titan Machinery  vs.  GungHo Online Entertainment

Titan Machinery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Titan Machinery reported solid returns over the last few months and may actually be approaching a breakup point.

GungHo Online Entert

Risk-Adjusted Performance

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Titan Machinery and GungHo Online

The main advantage of trading using opposite Titan Machinery and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery 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.

The idea behind Titan Machinery 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.