Correlation Between Krafton and NCsoft Corp
Can any of the company-specific risk be diversified away by investing in both Krafton and NCsoft Corp 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 Krafton and NCsoft Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krafton and NCsoft Corp, you can compare the effects of market volatilities on Krafton and NCsoft Corp 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 Krafton with a short position of NCsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krafton and NCsoft Corp.
Diversification Opportunities for Krafton and NCsoft Corp
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Krafton and NCsoft is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Krafton and NCsoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCsoft Corp and Krafton 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 Krafton are associated (or correlated) with NCsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCsoft Corp has no effect on the direction of Krafton i.e., Krafton and NCsoft Corp go up and down completely randomly.
Pair Corralation between Krafton and NCsoft Corp
Assuming the 90 days trading horizon Krafton is expected to generate 1.6 times more return on investment than NCsoft Corp. However, Krafton is 1.6 times more volatile than NCsoft Corp. It trades about 0.29 of its potential returns per unit of risk. NCsoft Corp is currently generating about -0.16 per unit of risk. If you would invest 31,650,000 in Krafton on November 3, 2024 and sell it today you would earn a total of 4,750,000 from holding Krafton or generate 15.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krafton vs. NCsoft Corp
Performance |
| Timeline |
| Krafton |
| NCsoft Corp |
Krafton and NCsoft Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krafton and NCsoft Corp
The main advantage of trading using opposite Krafton and NCsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krafton position performs unexpectedly, NCsoft Corp 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 NCsoft Corp will offset losses from the drop in NCsoft Corp's long position.| Krafton vs. Automobile Pc | Krafton vs. TOPMATERIAL LTD | Krafton vs. WONIK Materials CoLtd | Krafton vs. Kolon Plastics |
| NCsoft Corp vs. Com2uS | NCsoft Corp vs. Kakao Games Corp | NCsoft Corp vs. Busan Industrial Co | NCsoft Corp vs. Busan Ind |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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