Correlation Between Sega Sammy and DeNA

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

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

Diversification Opportunities for Sega Sammy and DeNA

-0.07

Correlation Coefficient

Sega Sammy  DeNA

Good diversification

The 3 months correlation between Sega and DeNA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sega Sammy Holdings and DeNA Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DeNA and Sega Sammy 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 Sega Sammy Holdings are associated (or correlated) with DeNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DeNA has no effect on the direction of Sega Sammy i.e., Sega Sammy and DeNA go up and down completely randomly.

Pair Corralation between Sega Sammy and DeNA

Assuming the 90 days horizon Sega Sammy is expected to generate 1.55 times less return on investment than DeNA. But when comparing it to its historical volatility, Sega Sammy Holdings is 2.35 times less risky than DeNA. It trades about 0.18 of its potential returns per unit of risk. DeNA Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,670  in DeNA Co on October 10, 2024 and sell it today you would earn a total of  230.00  from holding DeNA Co or generate 13.77% return on investment over 90 days.

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

Sega Sammy Holdings  vs.  DeNA Co

Sega Sammy Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sega Sammy Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Sega Sammy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DeNA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DeNA Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, DeNA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sega Sammy and DeNA

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

The idea behind Sega Sammy Holdings and DeNA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.