Correlation Between GD Culture and Gravity

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

By analyzing existing cross correlation between GD Culture Group and Gravity Co, you can compare the effects of market volatilities on GD Culture and Gravity 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 GD Culture with a short position of Gravity. Check out your portfolio center. Please also check ongoing floating volatility patterns of GD Culture and Gravity.

Diversification Opportunities for GD Culture and Gravity

-0.33

Correlation Coefficient

GD Culture  Gravity

Very good diversification

The 3 months correlation between GDC and Gravity is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding GD Culture Group and Gravity Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gravity and GD Culture 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 GD Culture Group are associated (or correlated) with Gravity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gravity has no effect on the direction of GD Culture i.e., GD Culture and Gravity go up and down completely randomly.

Pair Corralation between GD Culture and Gravity

Considering the 90-day investment horizon GD Culture Group is expected to under-perform the Gravity. In addition to that, GD Culture is 3.95 times more volatile than Gravity Co. It trades about -0.09 of its total potential returns per unit of risk. Gravity Co is currently generating about 0.04 per unit of volatility. If you would invest  6,312  in Gravity Co on August 30, 2024 and sell it today you would earn a total of  282.00  from holding Gravity Co or generate 4.47% return on investment over 90 days.

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

GD Culture Group  vs.  Gravity Co

GD Culture Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GD Culture Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Gravity

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gravity Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Gravity may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with GD Culture and Gravity

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

The idea behind GD Culture Group and Gravity Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.