Correlation Between GungHo Online and TTW PCL

Can any of the company-specific risk be diversified away by investing in both GungHo Online and TTW PCL 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 TTW PCL 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 TTW PCL, you can compare the effects of market volatilities on GungHo Online and TTW PCL 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 TTW PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GungHo Online and TTW PCL.

Diversification Opportunities for GungHo Online and TTW PCL

0.02

Correlation Coefficient

GungHo Online  TTW PCL

Significant diversification

The 3 months correlation between GungHo and TTW is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding GungHo Online Entertainment and TTW PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTW PCL 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 TTW PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTW PCL has no effect on the direction of GungHo Online i.e., GungHo Online and TTW PCL go up and down completely randomly.

Pair Corralation between GungHo Online and TTW PCL

Assuming the 90 days horizon GungHo Online Entertainment is expected to generate 1.37 times more return on investment than TTW PCL. However, GungHo Online is 1.37 times more volatile than TTW PCL. It trades about 0.03 of its potential returns per unit of risk. TTW PCL is currently generating about 0.01 per unit of risk. If you would invest  1,960  in GungHo Online Entertainment on October 6, 2024 and sell it today you would earn a total of  40.00  from holding GungHo Online Entertainment or generate 2.04% return on investment over 90 days.

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

GungHo Online Entertainment  vs.  TTW PCL

GungHo Online Entert

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GungHo Online Entertainment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GungHo Online reported solid returns over the last few months and may actually be approaching a breakup point.

TTW PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TTW PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TTW PCL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GungHo Online and TTW PCL

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

The idea behind GungHo Online Entertainment and TTW PCL 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.