Correlation Between Capcom and NEXON
Can any of the company-specific risk be diversified away by investing in both Capcom and NEXON 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 Capcom and NEXON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capcom Co and NEXON Co, you can compare the effects of market volatilities on Capcom and NEXON 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 Capcom with a short position of NEXON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capcom and NEXON.
Diversification Opportunities for Capcom and NEXON
Very good diversification
The 3 months correlation between Capcom and NEXON is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Capcom Co and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON and Capcom 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 Capcom Co are associated (or correlated) with NEXON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON has no effect on the direction of Capcom i.e., Capcom and NEXON go up and down completely randomly.
Pair Corralation between Capcom and NEXON
Assuming the 90 days horizon Capcom Co is expected to generate 6.9 times more return on investment than NEXON. However, Capcom is 6.9 times more volatile than NEXON Co. It trades about 0.1 of its potential returns per unit of risk. NEXON Co is currently generating about -0.02 per unit of risk. If you would invest 1,552 in Capcom Co on October 21, 2024 and sell it today you would earn a total of 558.00 from holding Capcom Co or generate 35.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.43% |
| Values | Daily Returns |
Capcom Co vs. NEXON Co
Performance |
| Timeline |
| Capcom |
| NEXON |
Capcom and NEXON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capcom and NEXON
The main advantage of trading using opposite Capcom and NEXON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capcom position performs unexpectedly, NEXON 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 NEXON will offset losses from the drop in NEXON's long position.| Capcom vs. Square Enix Holdings | Capcom vs. CD Projekt SA | Capcom vs. Sega Sammy Holdings | Capcom vs. Square Enix Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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