Correlation Between Molina Healthcare and GungHo Online

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

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

Diversification Opportunities for Molina Healthcare and GungHo Online

0.19

Correlation Coefficient

Molina Healthcare  GungHo Online

Average diversification

The 3 months correlation between Molina and GungHo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare 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 Molina Healthcare 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 Molina Healthcare 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 Molina Healthcare i.e., Molina Healthcare and GungHo Online go up and down completely randomly.

Pair Corralation between Molina Healthcare and GungHo Online

Assuming the 90 days trading horizon Molina Healthcare is expected to generate 2.26 times less return on investment than GungHo Online. In addition to that, Molina Healthcare is 1.04 times more volatile than GungHo Online Entertainment. It trades about 0.01 of its total potential returns per unit of risk. GungHo Online Entertainment is currently generating about 0.03 per unit of volatility. If you would invest  1,480  in GungHo Online Entertainment on October 24, 2024 and sell it today you would earn a total of  420.00  from holding GungHo Online Entertainment or generate 28.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Molina Healthcare  vs.  GungHo Online Entertainment

Molina Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molina Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GungHo Online Entert

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Molina Healthcare and GungHo Online

The main advantage of trading using opposite Molina Healthcare and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare 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 Molina Healthcare 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.