Correlation Between Capcom Co and Gravity

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

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

Diversification Opportunities for Capcom Co and Gravity

-0.26

Correlation Coefficient

Capcom Co  Gravity

Very good diversification

The 3 months correlation between Capcom and Gravity is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Capcom Co Ltd and Gravity Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gravity and Capcom Co 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 Capcom Co Ltd 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 Capcom Co i.e., Capcom Co and Gravity go up and down completely randomly.

Pair Corralation between Capcom Co and Gravity

Assuming the 90 days horizon Capcom Co Ltd is expected to under-perform the Gravity. But the pink sheet apears to be less risky and, when comparing its historical volatility, Capcom Co Ltd is 1.23 times less risky than Gravity. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Gravity Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,383  in Gravity Co on September 12, 2024 and sell it today you would earn a total of  344.00  from holding Gravity Co or generate 5.39% return on investment over 90 days.

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

Capcom Co Ltd  vs.  Gravity Co

Capcom Co

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 January 2025.

Pair Trading with Capcom Co and Gravity

The main advantage of trading using opposite Capcom Co and Gravity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capcom Co 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 Capcom Co Ltd 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.