Correlation Between Netmarble Games and FNC Entertainment
Can any of the company-specific risk be diversified away by investing in both Netmarble Games and FNC Entertainment 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 Netmarble Games and FNC Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netmarble Games Corp and FNC Entertainment Co, you can compare the effects of market volatilities on Netmarble Games and FNC Entertainment 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 Netmarble Games with a short position of FNC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netmarble Games and FNC Entertainment.
Diversification Opportunities for Netmarble Games and FNC Entertainment
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Netmarble and FNC is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Netmarble Games Corp and FNC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNC Entertainment and Netmarble Games 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 Netmarble Games Corp are associated (or correlated) with FNC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNC Entertainment has no effect on the direction of Netmarble Games i.e., Netmarble Games and FNC Entertainment go up and down completely randomly.
Pair Corralation between Netmarble Games and FNC Entertainment
Assuming the 90 days trading horizon Netmarble Games Corp is expected to generate 0.81 times more return on investment than FNC Entertainment. However, Netmarble Games Corp is 1.23 times less risky than FNC Entertainment. It trades about -0.25 of its potential returns per unit of risk. FNC Entertainment Co is currently generating about -0.23 per unit of risk. If you would invest 5,620,000 in Netmarble Games Corp on August 25, 2024 and sell it today you would lose (645,000) from holding Netmarble Games Corp or give up 11.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Netmarble Games Corp vs. FNC Entertainment Co
Performance |
| Timeline |
| Netmarble Games Corp |
| FNC Entertainment |
Netmarble Games and FNC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netmarble Games and FNC Entertainment
The main advantage of trading using opposite Netmarble Games and FNC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netmarble Games position performs unexpectedly, FNC Entertainment 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 FNC Entertainment will offset losses from the drop in FNC Entertainment's long position.| Netmarble Games vs. Kisan Telecom Co | Netmarble Games vs. SK Chemicals Co | Netmarble Games vs. SK Telecom Co | Netmarble Games vs. Korea Information Communications |
| FNC Entertainment vs. SM Entertainment Co | FNC Entertainment vs. LG Chemicals | FNC Entertainment vs. Cube Entertainment | FNC Entertainment vs. Daejung Chemicals Metals |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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