Correlation Between Korea Real and Netmarble Games
Can any of the company-specific risk be diversified away by investing in both Korea Real 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 Korea Real and Netmarble Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Real Estate and Netmarble Games Corp, you can compare the effects of market volatilities on Korea Real 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 Korea Real with a short position of Netmarble Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and Netmarble Games.
Diversification Opportunities for Korea Real and Netmarble Games
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Netmarble is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate 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 Korea Real 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 Korea Real Estate 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 Korea Real i.e., Korea Real and Netmarble Games go up and down completely randomly.
Pair Corralation between Korea Real and Netmarble Games
Assuming the 90 days trading horizon Korea Real Estate is expected to under-perform the Netmarble Games. But the stock apears to be less risky and, when comparing its historical volatility, Korea Real Estate is 3.14 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 5,730,000 in Netmarble Games Corp on October 10, 2024 and sell it today you would lose (470,000) from holding Netmarble Games Corp or give up 8.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. Netmarble Games Corp
Performance |
| Timeline |
| Korea Real Estate |
| Netmarble Games Corp |
Korea Real and Netmarble Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and Netmarble Games
The main advantage of trading using opposite Korea Real and Netmarble Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real 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.| Korea Real vs. Solus Advanced Materials | Korea Real vs. TOPMATERIAL LTD | Korea Real vs. Lotte Chilsung Beverage | Korea Real vs. Korean Air Lines |
| Netmarble Games vs. Kolon Plastics | Netmarble Games vs. Ssangyong Materials Corp | Netmarble Games vs. Daejoo Electronic Materials | Netmarble Games vs. Top Material Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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