Correlation Between SohuCom and GDEV

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

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

Diversification Opportunities for SohuCom and GDEV

0.21

Correlation Coefficient

SohuCom  GDEV

Modest diversification

The 3 months correlation between SohuCom and GDEV is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SohuCom and GDEV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDEV Inc and SohuCom 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 SohuCom are associated (or correlated) with GDEV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDEV Inc has no effect on the direction of SohuCom i.e., SohuCom and GDEV go up and down completely randomly.

Pair Corralation between SohuCom and GDEV

Given the investment horizon of 90 days SohuCom is expected to generate 0.59 times more return on investment than GDEV. However, SohuCom is 1.69 times less risky than GDEV. It trades about -0.09 of its potential returns per unit of risk. GDEV Inc is currently generating about -0.16 per unit of risk. If you would invest  1,436  in SohuCom on September 4, 2024 and sell it today you would lose (93.00) from holding SohuCom or give up 6.48% of portfolio value over 90 days.

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

SohuCom  vs.  GDEV Inc

SohuCom

Risk-Adjusted Performance

0 of 100

Very Weak

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

GDEV Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GDEV Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, GDEV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SohuCom and GDEV

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

The idea behind SohuCom and GDEV Inc 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.