Correlation Between Nongshim and Kakao Games
Can any of the company-specific risk be diversified away by investing in both Nongshim and Kakao Games 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 Nongshim and Kakao Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nongshim and Kakao Games Corp, you can compare the effects of market volatilities on Nongshim and Kakao Games 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 Nongshim with a short position of Kakao Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nongshim and Kakao Games.
Diversification Opportunities for Nongshim and Kakao Games
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nongshim and Kakao is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nongshim and Kakao Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kakao Games Corp and Nongshim 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 Nongshim are associated (or correlated) with Kakao Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kakao Games Corp has no effect on the direction of Nongshim i.e., Nongshim and Kakao Games go up and down completely randomly.
Pair Corralation between Nongshim and Kakao Games
Assuming the 90 days trading horizon Nongshim is expected to generate 1.0 times more return on investment than Kakao Games. However, Nongshim is 1.0 times less risky than Kakao Games. It trades about -0.02 of its potential returns per unit of risk. Kakao Games Corp is currently generating about -0.05 per unit of risk. If you would invest 40,450,000 in Nongshim on September 4, 2024 and sell it today you would lose (6,600,000) from holding Nongshim or give up 16.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nongshim vs. Kakao Games Corp
Performance |
| Timeline |
| Nongshim |
| Kakao Games Corp |
Nongshim and Kakao Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nongshim and Kakao Games
The main advantage of trading using opposite Nongshim and Kakao Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nongshim position performs unexpectedly, Kakao Games 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 Kakao Games will offset losses from the drop in Kakao Games' long position.| Nongshim vs. Kakao Games Corp | Nongshim vs. LG Household Healthcare | Nongshim vs. Cloud Air CoLtd | Nongshim vs. Bohae Brewery |
| Kakao Games vs. Posco ICT | Kakao Games vs. Devsisters corporation | Kakao Games vs. Alchera | Kakao Games vs. Nice Information Telecommunication |
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 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.
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