Correlation Between GOME Retail and Seino Holdings

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

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

Diversification Opportunities for GOME Retail and Seino Holdings

-0.35

Correlation Coefficient

GOME Retail  Seino Holdings

Very good diversification

The 3 months correlation between GOME and Seino is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding GOME Retail Holdings and Seino Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seino Holdings and GOME Retail 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 GOME Retail Holdings are associated (or correlated) with Seino Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seino Holdings has no effect on the direction of GOME Retail i.e., GOME Retail and Seino Holdings go up and down completely randomly.

Pair Corralation between GOME Retail and Seino Holdings

Assuming the 90 days trading horizon GOME Retail Holdings is expected to generate 6.44 times more return on investment than Seino Holdings. However, GOME Retail is 6.44 times more volatile than Seino Holdings Co. It trades about 0.02 of its potential returns per unit of risk. Seino Holdings Co is currently generating about 0.06 per unit of risk. If you would invest  1.45  in GOME Retail Holdings on September 27, 2024 and sell it today you would lose (1.35) from holding GOME Retail Holdings or give up 93.1% of portfolio value over 90 days.

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

GOME Retail Holdings  vs.  Seino Holdings Co

GOME Retail Holdings

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days GOME Retail Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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.

Seino Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seino Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Seino Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GOME Retail and Seino Holdings

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

The idea behind GOME Retail Holdings and Seino Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.