Correlation Between GungHo Online and RCM TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both GungHo Online and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 RCM TECHNOLOGIES, you can compare the effects of market volatilities on GungHo Online and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GungHo Online and RCM TECHNOLOGIES.
Diversification Opportunities for GungHo Online and RCM TECHNOLOGIES
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between GungHo and RCM is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding GungHo Online Entertainment and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM TECHNOLOGIES has no effect on the direction of GungHo Online i.e., GungHo Online and RCM TECHNOLOGIES go up and down completely randomly.
Pair Corralation between GungHo Online and RCM TECHNOLOGIES
Assuming the 90 days horizon GungHo Online is expected to generate 1.16 times less return on investment than RCM TECHNOLOGIES. But when comparing it to its historical volatility, GungHo Online Entertainment is 1.06 times less risky than RCM TECHNOLOGIES. It trades about 0.18 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,020 in RCM TECHNOLOGIES on September 24, 2024 and sell it today you would earn a total of 140.00 from holding RCM TECHNOLOGIES or generate 6.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 76.19% |
Values | Daily Returns |
GungHo Online Entertainment vs. RCM TECHNOLOGIES
Performance |
Timeline |
GungHo Online Entert |
RCM TECHNOLOGIES |
GungHo Online and RCM TECHNOLOGIES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GungHo Online and RCM TECHNOLOGIES
The main advantage of trading using opposite GungHo Online and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GungHo Online position performs unexpectedly, RCM TECHNOLOGIES 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 RCM TECHNOLOGIES will offset losses from the drop in RCM TECHNOLOGIES's long position.GungHo Online vs. SEI INVESTMENTS | GungHo Online vs. Public Storage | GungHo Online vs. Science Applications International | GungHo Online vs. PennantPark Investment |
RCM TECHNOLOGIES vs. Check Point Software | RCM TECHNOLOGIES vs. Micron Technology | RCM TECHNOLOGIES vs. Universal Entertainment | RCM TECHNOLOGIES vs. CNVISION MEDIA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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