Correlation Between Naver and Itcen
Can any of the company-specific risk be diversified away by investing in both Naver and Itcen 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 Itcen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naver and Itcen Co, you can compare the effects of market volatilities on Naver and Itcen 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 Itcen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naver and Itcen.
Diversification Opportunities for Naver and Itcen
Pay attention - limited upside
The 3 months correlation between Naver and Itcen is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Naver and Itcen Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itcen 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 Itcen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itcen has no effect on the direction of Naver i.e., Naver and Itcen go up and down completely randomly.
Pair Corralation between Naver and Itcen
Assuming the 90 days trading horizon Naver is expected to generate 0.54 times more return on investment than Itcen. However, Naver is 1.85 times less risky than Itcen. It trades about 0.04 of its potential returns per unit of risk. Itcen Co is currently generating about 0.02 per unit of risk. If you would invest 17,960,000 in Naver on October 14, 2024 and sell it today you would earn a total of 2,240,000 from holding Naver or generate 12.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naver vs. Itcen Co
Performance |
| Timeline |
| Naver |
| Itcen |
Naver and Itcen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naver and Itcen
The main advantage of trading using opposite Naver and Itcen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naver position performs unexpectedly, Itcen 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 Itcen will offset losses from the drop in Itcen's long position.| Naver vs. Keyang Electric Machinery | Naver vs. Hankook Furniture Co | Naver vs. ENERGYMACHINERY KOREA CoLtd | Naver vs. KEPCO Engineering Construction |
| Itcen vs. Pan Entertainment Co | Itcen vs. SAMG Entertainment Co | Itcen vs. Alton Sports CoLtd | Itcen vs. Daou Data Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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