Correlation Between Square Enix and Konami Holdings

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

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

Diversification Opportunities for Square Enix and Konami Holdings

0.13

Correlation Coefficient

Square Enix  Konami Holdings

Average diversification

The 3 months correlation between Square and Konami is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Square Enix Holdings and Konami Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konami Holdings and Square Enix 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 Square Enix Holdings are associated (or correlated) with Konami Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konami Holdings has no effect on the direction of Square Enix i.e., Square Enix and Konami Holdings go up and down completely randomly.

Pair Corralation between Square Enix and Konami Holdings

Assuming the 90 days horizon Square Enix is expected to generate 1.09 times less return on investment than Konami Holdings. In addition to that, Square Enix is 1.47 times more volatile than Konami Holdings. It trades about 0.06 of its total potential returns per unit of risk. Konami Holdings is currently generating about 0.09 per unit of volatility. If you would invest  4,374  in Konami Holdings on September 3, 2024 and sell it today you would earn a total of  478.00  from holding Konami Holdings or generate 10.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Square Enix Holdings  vs.  Konami Holdings

Square Enix Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

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

Konami Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Konami Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, Konami Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Square Enix and Konami Holdings

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

The idea behind Square Enix Holdings and Konami Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.