Correlation Between GungHo Online and Ibiden CoLtd

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

Diversification Opportunities for GungHo Online and Ibiden CoLtd

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between GungHo and Ibiden is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding GungHo Online Entertainment and Ibiden CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibiden CoLtd 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 Ibiden CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibiden CoLtd has no effect on the direction of GungHo Online i.e., GungHo Online and Ibiden CoLtd go up and down completely randomly.

Pair Corralation between GungHo Online and Ibiden CoLtd

Assuming the 90 days horizon GungHo Online Entertainment is expected to generate 0.68 times more return on investment than Ibiden CoLtd. However, GungHo Online Entertainment is 1.48 times less risky than Ibiden CoLtd. It trades about 0.09 of its potential returns per unit of risk. Ibiden CoLtd is currently generating about -0.06 per unit of risk. If you would invest  1,570  in GungHo Online Entertainment on September 30, 2024 and sell it today you would earn a total of  400.00  from holding GungHo Online Entertainment or generate 25.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GungHo Online Entertainment  vs.  Ibiden CoLtd

 Performance 
       Timeline  
GungHo Online Entert 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in GungHo Online Entertainment are ranked lower than 3 (%) 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Ibiden CoLtd 

Risk-Adjusted Performance

0 of 100

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

GungHo Online and Ibiden CoLtd Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GungHo Online and Ibiden CoLtd

The main advantage of trading using opposite GungHo Online and Ibiden CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GungHo Online position performs unexpectedly, Ibiden CoLtd 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 Ibiden CoLtd will offset losses from the drop in Ibiden CoLtd's long position.
The idea behind GungHo Online Entertainment and Ibiden CoLtd 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.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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