Correlation Between Naver and PLAYWITH
Can any of the company-specific risk be diversified away by investing in both Naver and PLAYWITH 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 PLAYWITH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naver and PLAYWITH, you can compare the effects of market volatilities on Naver and PLAYWITH 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 PLAYWITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naver and PLAYWITH.
Diversification Opportunities for Naver and PLAYWITH
Excellent diversification
The 3 months correlation between Naver and PLAYWITH is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Naver and PLAYWITH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWITH 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 PLAYWITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYWITH has no effect on the direction of Naver i.e., Naver and PLAYWITH go up and down completely randomly.
Pair Corralation between Naver and PLAYWITH
Assuming the 90 days trading horizon Naver is expected to generate 0.51 times more return on investment than PLAYWITH. However, Naver is 1.97 times less risky than PLAYWITH. It trades about 0.04 of its potential returns per unit of risk. PLAYWITH is currently generating about -0.08 per unit of risk. If you would invest 18,440,000 in Naver on September 27, 2024 and sell it today you would earn a total of 1,810,000 from holding Naver or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naver vs. PLAYWITH
Performance |
| Timeline |
| Naver |
| PLAYWITH |
Naver and PLAYWITH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naver and PLAYWITH
The main advantage of trading using opposite Naver and PLAYWITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naver position performs unexpectedly, PLAYWITH 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 PLAYWITH will offset losses from the drop in PLAYWITH's long position.| Naver vs. Samsung Electronics Co | Naver vs. Samsung Electronics Co | Naver vs. KB Financial Group | Naver vs. Shinhan Financial Group |
| PLAYWITH vs. Nam Hwa Construction | PLAYWITH vs. Lotte Data Communication | PLAYWITH vs. Polaris Office Corp | PLAYWITH vs. Seohee Construction 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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