Correlation Between Naver and Leaders Technology
Can any of the company-specific risk be diversified away by investing in both Naver and Leaders Technology 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 Leaders Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naver and Leaders Technology Investment, you can compare the effects of market volatilities on Naver and Leaders Technology 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 Leaders Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naver and Leaders Technology.
Diversification Opportunities for Naver and Leaders Technology
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Naver and Leaders is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Naver and Leaders Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaders Technology 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 Leaders Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaders Technology has no effect on the direction of Naver i.e., Naver and Leaders Technology go up and down completely randomly.
Pair Corralation between Naver and Leaders Technology
Assuming the 90 days trading horizon Naver is expected to generate 0.56 times more return on investment than Leaders Technology. However, Naver is 1.79 times less risky than Leaders Technology. It trades about 0.1 of its potential returns per unit of risk. Leaders Technology Investment is currently generating about -0.09 per unit of risk. If you would invest 19,320,000 in Naver on September 26, 2024 and sell it today you would earn a total of 930,000 from holding Naver or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naver vs. Leaders Technology Investment
Performance |
| Timeline |
| Naver |
| Leaders Technology |
Naver and Leaders Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naver and Leaders Technology
The main advantage of trading using opposite Naver and Leaders Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naver position performs unexpectedly, Leaders Technology 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 Leaders Technology will offset losses from the drop in Leaders Technology's long position.| Naver vs. Samsung Electronics Co | Naver vs. Samsung Electronics Co | Naver vs. KB Financial Group | Naver vs. Shinhan Financial Group |
| Leaders Technology vs. KB Financial Group | Leaders Technology vs. Shinhan Financial Group | Leaders Technology vs. Hyundai Motor | Leaders Technology vs. Hyundai Motor 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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