Correlation Between Konami Holdings and Nintendo

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

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

Diversification Opportunities for Konami Holdings and Nintendo

0.16

Correlation Coefficient

Konami Holdings  Nintendo

Average diversification

The 3 months correlation between Konami and Nintendo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Konami Holdings and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo and Konami Holdings 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 Konami Holdings are associated (or correlated) with Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of Konami Holdings i.e., Konami Holdings and Nintendo go up and down completely randomly.

Pair Corralation between Konami Holdings and Nintendo

If you would invest  5,365  in Nintendo Co on September 4, 2024 and sell it today you would earn a total of  435.00  from holding Nintendo Co or generate 8.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Konami Holdings  vs.  Nintendo Co

Konami Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nintendo

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nintendo Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Nintendo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Konami Holdings and Nintendo

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

The idea behind Konami Holdings and Nintendo 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.