Correlation Between GungHo Online and AEON MALL

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

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

Diversification Opportunities for GungHo Online and AEON MALL

-0.18

Correlation Coefficient

GungHo Online  AEON MALL

Good diversification

The 3 months correlation between GungHo and AEON is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GungHo Online Entertainment and AEON MALL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON MALL LTD and GungHo Online 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 GungHo Online Entertainment are associated (or correlated) with AEON MALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON MALL LTD has no effect on the direction of GungHo Online i.e., GungHo Online and AEON MALL go up and down completely randomly.

Pair Corralation between GungHo Online and AEON MALL

Assuming the 90 days horizon GungHo Online Entertainment is expected to generate 1.87 times more return on investment than AEON MALL. However, GungHo Online is 1.87 times more volatile than AEON MALL LTD. It trades about 0.0 of its potential returns per unit of risk. AEON MALL LTD is currently generating about -0.02 per unit of risk. If you would invest  1,930  in GungHo Online Entertainment on October 26, 2024 and sell it today you would lose (40.00) from holding GungHo Online Entertainment or give up 2.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

GungHo Online Entertainment  vs.  AEON MALL LTD

GungHo Online Entert

Risk-Adjusted Performance

0 of 100

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.

AEON MALL LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GungHo Online and AEON MALL

The main advantage of trading using opposite GungHo Online and AEON MALL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GungHo Online position performs unexpectedly, AEON MALL 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 AEON MALL will offset losses from the drop in AEON MALL's long position.

The idea behind GungHo Online Entertainment and AEON MALL LTD 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.