Correlation Between Top Material and Netmarble Games
Can any of the company-specific risk be diversified away by investing in both Top Material and Netmarble Games 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 Top Material and Netmarble Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Material Co and Netmarble Games Corp, you can compare the effects of market volatilities on Top Material and Netmarble Games 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 Top Material with a short position of Netmarble Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Material and Netmarble Games.
Diversification Opportunities for Top Material and Netmarble Games
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Top and Netmarble is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Top Material Co and Netmarble Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmarble Games Corp and Top Material 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 Top Material Co are associated (or correlated) with Netmarble Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmarble Games Corp has no effect on the direction of Top Material i.e., Top Material and Netmarble Games go up and down completely randomly.
Pair Corralation between Top Material and Netmarble Games
Assuming the 90 days trading horizon Top Material Co is expected to generate 1.99 times more return on investment than Netmarble Games. However, Top Material is 1.99 times more volatile than Netmarble Games Corp. It trades about 0.19 of its potential returns per unit of risk. Netmarble Games Corp is currently generating about -0.02 per unit of risk. If you would invest 2,485,000 in Top Material Co on October 10, 2024 and sell it today you would earn a total of 410,000 from holding Top Material Co or generate 16.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Material Co vs. Netmarble Games Corp
Performance |
| Timeline |
| Top Material |
| Netmarble Games Corp |
Top Material and Netmarble Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Material and Netmarble Games
The main advantage of trading using opposite Top Material and Netmarble Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Material position performs unexpectedly, Netmarble Games 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 Netmarble Games will offset losses from the drop in Netmarble Games' long position.| Top Material vs. Heungkuk Metaltech CoLtd | Top Material vs. Kukil Metal Co | Top Material vs. DONGKUK TED METAL | Top Material vs. Lotte Data Communication |
| Netmarble Games vs. Hwangkum Steel Technology | Netmarble Games vs. Eugene Technology CoLtd | Netmarble Games vs. RF Materials Co | Netmarble Games vs. Lake Materials 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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