Correlation Between AfreecaTV and Naver
Can any of the company-specific risk be diversified away by investing in both AfreecaTV and Naver 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 AfreecaTV and Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfreecaTV Co and Naver, you can compare the effects of market volatilities on AfreecaTV and Naver 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 AfreecaTV with a short position of Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfreecaTV and Naver.
Diversification Opportunities for AfreecaTV and Naver
Very weak diversification
The 3 months correlation between AfreecaTV and Naver is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding AfreecaTV Co and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and AfreecaTV 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 AfreecaTV Co are associated (or correlated) with Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of AfreecaTV i.e., AfreecaTV and Naver go up and down completely randomly.
Pair Corralation between AfreecaTV and Naver
Assuming the 90 days trading horizon AfreecaTV is expected to generate 14.46 times less return on investment than Naver. In addition to that, AfreecaTV is 1.32 times more volatile than Naver. It trades about 0.01 of its total potential returns per unit of risk. Naver is currently generating about 0.2 per unit of volatility. If you would invest 19,080,000 in Naver on September 18, 2024 and sell it today you would earn a total of 1,870,000 from holding Naver or generate 9.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
AfreecaTV Co vs. Naver
Performance |
| Timeline |
| AfreecaTV |
| Naver |
AfreecaTV and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfreecaTV and Naver
The main advantage of trading using opposite AfreecaTV and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfreecaTV position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.The idea behind AfreecaTV Co and Naver pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Naver vs. Daelim Trading Co | Naver vs. TS Investment Corp | Naver vs. Samyung Trading Co | Naver vs. SV Investment |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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