Correlation Between Naver and Ni Steel
Can any of the company-specific risk be diversified away by investing in both Naver and Ni Steel 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 Naver and Ni Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naver and Ni Steel, you can compare the effects of market volatilities on Naver and Ni Steel 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 Naver with a short position of Ni Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naver and Ni Steel.
Diversification Opportunities for Naver and Ni Steel
Excellent diversification
The 3 months correlation between Naver and 008260 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Naver and Ni Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ni Steel and Naver 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 Naver are associated (or correlated) with Ni Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ni Steel has no effect on the direction of Naver i.e., Naver and Ni Steel go up and down completely randomly.
Pair Corralation between Naver and Ni Steel
Assuming the 90 days trading horizon Naver is expected to generate 1.03 times more return on investment than Ni Steel. However, Naver is 1.03 times more volatile than Ni Steel. It trades about 0.01 of its potential returns per unit of risk. Ni Steel is currently generating about -0.07 per unit of risk. If you would invest 21,450,000 in Naver on September 12, 2024 and sell it today you would lose (550,000) from holding Naver or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naver vs. Ni Steel
Performance |
| Timeline |
| Naver |
| Ni Steel |
Naver and Ni Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naver and Ni Steel
The main advantage of trading using opposite Naver and Ni Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naver position performs unexpectedly, Ni Steel 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 Ni Steel will offset losses from the drop in Ni Steel's long position.| Naver vs. Keyang Electric Machinery | Naver vs. TS Investment Corp | Naver vs. Dongwoo Farm To | Naver vs. Tuksu Engineering ConstructionLtd |
| Ni Steel vs. Lotte Data Communication | Ni Steel vs. Seoul Electronics Telecom | Ni Steel vs. ECSTELECOM Co | Ni Steel vs. Samsung Life Insurance |
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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