Correlation Between Naver and Korea New
Can any of the company-specific risk be diversified away by investing in both Naver and Korea New 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 Korea New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naver and Korea New Network, you can compare the effects of market volatilities on Naver and Korea New 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 Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naver and Korea New.
Diversification Opportunities for Naver and Korea New
Weak diversification
The 3 months correlation between Naver and Korea is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Naver and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network 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 Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of Naver i.e., Naver and Korea New go up and down completely randomly.
Pair Corralation between Naver and Korea New
Assuming the 90 days trading horizon Naver is expected to generate 0.92 times more return on investment than Korea New. However, Naver is 1.08 times less risky than Korea New. It trades about 0.0 of its potential returns per unit of risk. Korea New Network is currently generating about -0.01 per unit of risk. If you would invest 23,000,000 in Naver on September 1, 2024 and sell it today you would lose (2,350,000) from holding Naver or give up 10.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.77% |
| Values | Daily Returns |
Naver vs. Korea New Network
Performance |
| Timeline |
| Naver |
| Korea New Network |
Naver and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naver and Korea New
The main advantage of trading using opposite Naver and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naver position performs unexpectedly, Korea New 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 Korea New will offset losses from the drop in Korea New's long position.| Naver vs. Sunny Electronics Corp | Naver vs. Sungwoo Electronics Co | Naver vs. Wave Electronics Co | Naver vs. Sangshin Electronics Co |
| Korea New vs. KT Submarine Telecom | Korea New vs. SK Telecom Co | Korea New vs. Formetal Co | Korea New vs. Innowireless 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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