Correlation Between Burke Herbert and GungHo Online

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

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

Diversification Opportunities for Burke Herbert and GungHo Online

0.5

Correlation Coefficient

Burke Herbert  GungHo Online

Very weak diversification

The 3 months correlation between Burke and GungHo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Burke Herbert Financial 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 Burke Herbert 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 Burke Herbert Financial 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 Burke Herbert i.e., Burke Herbert and GungHo Online go up and down completely randomly.

Pair Corralation between Burke Herbert and GungHo Online

Given the investment horizon of 90 days Burke Herbert Financial is expected to generate 1.74 times more return on investment than GungHo Online. However, Burke Herbert is 1.74 times more volatile than GungHo Online Entertainment. It trades about -0.1 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about -0.25 per unit of risk. If you would invest  5,499  in Burke Herbert Financial on January 20, 2024 and sell it today you would lose (306.00) from holding Burke Herbert Financial or give up 5.56% of portfolio value over 90 days.

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

Burke Herbert Financial  vs.  GungHo Online Entertainment

Burke Herbert Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Burke Herbert Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GungHo Online Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GungHo Online Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Burke Herbert and GungHo Online

The main advantage of trading using opposite Burke Herbert and GungHo Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burke Herbert 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 Burke Herbert Financial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.