Correlation Between Adtalem Global and GungHo Online

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

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

Diversification Opportunities for Adtalem Global and GungHo Online

0.64

Correlation Coefficient

Adtalem Global  GungHo Online

Poor diversification

The 3 months correlation between Adtalem and GungHo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education 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 Adtalem Global 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 Adtalem Global Education 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 Adtalem Global i.e., Adtalem Global and GungHo Online go up and down completely randomly.

Pair Corralation between Adtalem Global and GungHo Online

Assuming the 90 days trading horizon Adtalem Global Education is expected to generate 0.9 times more return on investment than GungHo Online. However, Adtalem Global Education is 1.11 times less risky than GungHo Online. It trades about 0.16 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about 0.03 per unit of risk. If you would invest  6,300  in Adtalem Global Education on December 5, 2024 and sell it today you would earn a total of  2,950  from holding Adtalem Global Education or generate 46.83% return on investment over 90 days.

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

Adtalem Global Education  vs.  GungHo Online Entertainment

Adtalem Global Education

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Adtalem Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GungHo Online Entert

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GungHo Online Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Adtalem Global and GungHo Online

The main advantage of trading using opposite Adtalem Global and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global 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 Adtalem Global Education 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.