Correlation Between Kawasaki Kisen and GungHo Online

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

By analyzing existing cross correlation between Kawasaki Kisen Kaisha and GungHo Online Entertainment, you can compare the effects of market volatilities on Kawasaki Kisen and GungHo Online 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 Kawasaki Kisen with a short position of GungHo Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasaki Kisen and GungHo Online.

Diversification Opportunities for Kawasaki Kisen and GungHo Online

0.11

Correlation Coefficient

Kawasaki Kisen  GungHo Online

Average diversification

The 3 months correlation between Kawasaki and GungHo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kawasaki Kisen Kaisha and GungHo Online Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GungHo Online Entert and Kawasaki Kisen 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 Kawasaki Kisen Kaisha are associated (or correlated) with GungHo Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GungHo Online Entert has no effect on the direction of Kawasaki Kisen i.e., Kawasaki Kisen and GungHo Online go up and down completely randomly.

Pair Corralation between Kawasaki Kisen and GungHo Online

Assuming the 90 days trading horizon Kawasaki Kisen is expected to generate 1.57 times less return on investment than GungHo Online. But when comparing it to its historical volatility, Kawasaki Kisen Kaisha is 1.25 times less risky than GungHo Online. It trades about 0.12 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,870  in GungHo Online Entertainment on October 4, 2024 and sell it today you would earn a total of  100.00  from holding GungHo Online Entertainment or generate 5.35% return on investment over 90 days.

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

Kawasaki Kisen Kaisha  vs.  GungHo Online Entertainment

Kawasaki Kisen Kaisha

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kawasaki Kisen Kaisha are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Kawasaki Kisen may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GungHo Online Entert

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GungHo Online Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GungHo Online may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kawasaki Kisen and GungHo Online

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

The idea behind Kawasaki Kisen Kaisha and GungHo Online Entertainment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.