Correlation Between NEXON Co and Nintendo
Can any of the company-specific risk be diversified away by investing in both NEXON Co and Nintendo 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 Co and Nintendo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXON Co and Nintendo Co, you can compare the effects of market volatilities on NEXON Co and Nintendo 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 Co with a short position of Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXON Co and Nintendo.
Diversification Opportunities for NEXON Co and Nintendo
Excellent diversification
The 3 months correlation between NEXON and Nintendo is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NEXON Co and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo and NEXON Co 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 Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of NEXON Co i.e., NEXON Co and Nintendo go up and down completely randomly.
Pair Corralation between NEXON Co and Nintendo
Assuming the 90 days trading horizon NEXON Co is expected to generate 2.39 times more return on investment than Nintendo. However, NEXON Co is 2.39 times more volatile than Nintendo Co. It trades about 0.06 of its potential returns per unit of risk. Nintendo Co is currently generating about 0.05 per unit of risk. If you would invest 772.00 in NEXON Co on September 4, 2024 and sell it today you would earn a total of 568.00 from holding NEXON Co or generate 73.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXON Co vs. Nintendo Co
Performance |
| Timeline |
| NEXON Co |
| Nintendo |
NEXON Co and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXON Co and Nintendo
The main advantage of trading using opposite NEXON Co and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXON Co position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.| NEXON Co vs. EEDUCATION ALBERT AB | NEXON Co vs. Laureate Education | NEXON Co vs. CI GAMES SA | NEXON Co vs. American Public Education |
| Nintendo vs. ADRIATIC METALS LS 013355 | Nintendo vs. Cleanaway Waste Management | Nintendo vs. ALERION CLEANPOWER | Nintendo vs. ePlay Digital |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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