Correlation Between Kakao Games and BYON
Can any of the company-specific risk be diversified away by investing in both Kakao Games and BYON 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 Kakao Games and BYON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kakao Games Corp and BYON Co, you can compare the effects of market volatilities on Kakao Games and BYON 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 Kakao Games with a short position of BYON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kakao Games and BYON.
Diversification Opportunities for Kakao Games and BYON
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kakao and BYON is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kakao Games Corp and BYON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYON and Kakao 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 Kakao Games Corp are associated (or correlated) with BYON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYON has no effect on the direction of Kakao Games i.e., Kakao Games and BYON go up and down completely randomly.
Pair Corralation between Kakao Games and BYON
Assuming the 90 days trading horizon Kakao Games Corp is expected to generate 0.85 times more return on investment than BYON. However, Kakao Games Corp is 1.17 times less risky than BYON. It trades about 0.18 of its potential returns per unit of risk. BYON Co is currently generating about -0.06 per unit of risk. If you would invest 1,585,000 in Kakao Games Corp on September 19, 2024 and sell it today you would earn a total of 310,000 from holding Kakao Games Corp or generate 19.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kakao Games Corp vs. BYON Co
Performance |
| Timeline |
| Kakao Games Corp |
| BYON |
Kakao Games and BYON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kakao Games and BYON
The main advantage of trading using opposite Kakao Games and BYON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kakao Games position performs unexpectedly, BYON 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 BYON will offset losses from the drop in BYON's long position.| Kakao Games vs. Devsisters corporation | Kakao Games vs. Konan Technology | Kakao Games vs. Nice Information Telecommunication | Kakao Games vs. SKONEC Entertainment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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