Correlation Between Chuangs China and NEXON
Can any of the company-specific risk be diversified away by investing in both Chuangs China 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 Chuangs China and NEXON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and NEXON Co, you can compare the effects of market volatilities on Chuangs China 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 Chuangs China with a short position of NEXON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and NEXON.
Diversification Opportunities for Chuangs China and NEXON
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chuangs and NEXON is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON and Chuangs China 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 Chuangs China Investments 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 Chuangs China i.e., Chuangs China and NEXON go up and down completely randomly.
Pair Corralation between Chuangs China and NEXON
Assuming the 90 days horizon Chuangs China is expected to generate 9.76 times less return on investment than NEXON. But when comparing it to its historical volatility, Chuangs China Investments is 1.06 times less risky than NEXON. It trades about 0.01 of its potential returns per unit of risk. NEXON Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 710.00 in NEXON Co on September 12, 2024 and sell it today you would earn a total of 600.00 from holding NEXON Co or generate 84.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. NEXON Co
Performance |
| Timeline |
| Chuangs China Investments |
| NEXON |
Chuangs China and NEXON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and NEXON
The main advantage of trading using opposite Chuangs China and NEXON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China 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.| Chuangs China vs. RCM TECHNOLOGIES | Chuangs China vs. Spirent Communications plc | Chuangs China vs. CITIC Telecom International | Chuangs China vs. Lion Biotechnologies |
| NEXON vs. PACIFIC ONLINE | NEXON vs. Pembina Pipeline Corp | NEXON vs. PRECISION DRILLING P | NEXON vs. CarsalesCom |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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