Correlation Between SBM OFFSHORE and GungHo Online

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

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

Diversification Opportunities for SBM OFFSHORE and GungHo Online

-0.24

Correlation Coefficient

SBM OFFSHORE  GungHo Online

Very good diversification

The 3 months correlation between SBM and GungHo is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE i.e., SBM OFFSHORE and GungHo Online go up and down completely randomly.

Pair Corralation between SBM OFFSHORE and GungHo Online

Assuming the 90 days trading horizon SBM OFFSHORE is expected to under-perform the GungHo Online. But the stock apears to be less risky and, when comparing its historical volatility, SBM OFFSHORE is 1.15 times less risky than GungHo Online. The stock trades about -0.24 of its potential returns per unit of risk. The GungHo Online Entertainment is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,770  in GungHo Online Entertainment on September 21, 2024 and sell it today you would earn a total of  160.00  from holding GungHo Online Entertainment or generate 9.04% return on investment over 90 days.

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

SBM OFFSHORE  vs.  GungHo Online Entertainment

SBM OFFSHORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBM OFFSHORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, SBM OFFSHORE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

GungHo Online Entert

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GungHo Online Entertainment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GungHo Online is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SBM OFFSHORE and GungHo Online

The main advantage of trading using opposite SBM OFFSHORE and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE 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 SBM OFFSHORE 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 Stocks Directory module to find actively traded stocks across global markets.