Correlation Between Korean Drug and Netmarble Games
Can any of the company-specific risk be diversified away by investing in both Korean Drug and Netmarble 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 Korean Drug and Netmarble Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Drug Co and Netmarble Games Corp, you can compare the effects of market volatilities on Korean Drug and Netmarble 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 Korean Drug with a short position of Netmarble Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Drug and Netmarble Games.
Diversification Opportunities for Korean Drug and Netmarble Games
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korean and Netmarble is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Korean Drug Co and Netmarble Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmarble Games Corp and Korean Drug 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 Korean Drug Co are associated (or correlated) with Netmarble Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmarble Games Corp has no effect on the direction of Korean Drug i.e., Korean Drug and Netmarble Games go up and down completely randomly.
Pair Corralation between Korean Drug and Netmarble Games
Assuming the 90 days trading horizon Korean Drug Co is expected to under-perform the Netmarble Games. But the stock apears to be less risky and, when comparing its historical volatility, Korean Drug Co is 1.59 times less risky than Netmarble Games. The stock trades about -0.04 of its potential returns per unit of risk. The Netmarble Games Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6,030,000 in Netmarble Games Corp on October 28, 2024 and sell it today you would lose (1,675,000) from holding Netmarble Games Corp or give up 27.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korean Drug Co vs. Netmarble Games Corp
Performance |
| Timeline |
| Korean Drug |
| Netmarble Games Corp |
Korean Drug and Netmarble Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Drug and Netmarble Games
The main advantage of trading using opposite Korean Drug and Netmarble Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Drug position performs unexpectedly, Netmarble 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 Netmarble Games will offset losses from the drop in Netmarble Games' long position.| Korean Drug vs. Daiyang Metal Co | Korean Drug vs. Nam Hwa Construction | Korean Drug vs. Seohee Construction Co | Korean Drug vs. Dongbang Transport Logistics |
| Netmarble Games vs. NICE Information Service | Netmarble Games vs. System and Application | Netmarble Games vs. LG Household Healthcare | Netmarble Games vs. LG Household Healthcare |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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