Correlation Between GungHo Online and Veeva Systems

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

Diversification Opportunities for GungHo Online and Veeva Systems

0.27

Correlation Coefficient

GungHo Online  Veeva Systems

Modest diversification

The 3 months correlation between GungHo and Veeva is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding GungHo Online Entertainment and Veeva Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeva Systems 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 Veeva Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeva Systems has no effect on the direction of GungHo Online i.e., GungHo Online and Veeva Systems go up and down completely randomly.

Pair Corralation between GungHo Online and Veeva Systems

Assuming the 90 days horizon GungHo Online Entertainment is expected to under-perform the Veeva Systems. In addition to that, GungHo Online is 1.06 times more volatile than Veeva Systems. It trades about -0.04 of its total potential returns per unit of risk. Veeva Systems is currently generating about 0.04 per unit of volatility. If you would invest  20,790  in Veeva Systems on December 20, 2024 and sell it today you would earn a total of  910.00  from holding Veeva Systems or generate 4.38% return on investment over 90 days.

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

GungHo Online Entertainment  vs.  Veeva Systems

GungHo Online Entert

Risk-Adjusted Performance

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.

Veeva Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Veeva Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Veeva Systems is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GungHo Online and Veeva Systems

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

The idea behind GungHo Online Entertainment and Veeva Systems 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.