Correlation Between NEXON and GAMES OPERATORS
Can any of the company-specific risk be diversified away by investing in both NEXON and GAMES OPERATORS 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 NEXON and GAMES OPERATORS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXON Co and GAMES OPERATORS SA, you can compare the effects of market volatilities on NEXON and GAMES OPERATORS 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 NEXON with a short position of GAMES OPERATORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXON and GAMES OPERATORS.
Diversification Opportunities for NEXON and GAMES OPERATORS
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NEXON and GAMES is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NEXON Co and GAMES OPERATORS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMES OPERATORS SA and NEXON 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 NEXON Co are associated (or correlated) with GAMES OPERATORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMES OPERATORS SA has no effect on the direction of NEXON i.e., NEXON and GAMES OPERATORS go up and down completely randomly.
Pair Corralation between NEXON and GAMES OPERATORS
Assuming the 90 days trading horizon NEXON Co is expected to under-perform the GAMES OPERATORS. But the stock apears to be less risky and, when comparing its historical volatility, NEXON Co is 1.53 times less risky than GAMES OPERATORS. The stock trades about -0.32 of its potential returns per unit of risk. The GAMES OPERATORS SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 315.00 in GAMES OPERATORS SA on October 26, 2024 and sell it today you would earn a total of 4.00 from holding GAMES OPERATORS SA or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXON Co vs. GAMES OPERATORS SA
Performance |
| Timeline |
| NEXON |
| GAMES OPERATORS SA |
NEXON and GAMES OPERATORS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXON and GAMES OPERATORS
The main advantage of trading using opposite NEXON and GAMES OPERATORS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXON position performs unexpectedly, GAMES OPERATORS 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 GAMES OPERATORS will offset losses from the drop in GAMES OPERATORS's long position.The idea behind NEXON Co and GAMES OPERATORS SA 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.| GAMES OPERATORS vs. NEXON Co | GAMES OPERATORS vs. NEXON Co | GAMES OPERATORS vs. Take Two Interactive Software | GAMES OPERATORS vs. Aristocrat Leisure Limited |
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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