Correlation Between CN DATANG and NEXON Co
Can any of the company-specific risk be diversified away by investing in both CN DATANG and NEXON Co 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 CN DATANG and NEXON Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN DATANG C and NEXON Co, you can compare the effects of market volatilities on CN DATANG and NEXON Co 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 CN DATANG with a short position of NEXON Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN DATANG and NEXON Co.
Diversification Opportunities for CN DATANG and NEXON Co
Average diversification
The 3 months correlation between DT7 and NEXON is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CN DATANG C and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON Co and CN DATANG 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 CN DATANG C are associated (or correlated) with NEXON Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON Co has no effect on the direction of CN DATANG i.e., CN DATANG and NEXON Co go up and down completely randomly.
Pair Corralation between CN DATANG and NEXON Co
Assuming the 90 days trading horizon CN DATANG is expected to generate 347.77 times less return on investment than NEXON Co. But when comparing it to its historical volatility, CN DATANG C is 14.13 times less risky than NEXON Co. It trades about 0.01 of its potential returns per unit of risk. NEXON Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 631.00 in NEXON Co on October 11, 2024 and sell it today you would earn a total of 709.00 from holding NEXON Co or generate 112.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN DATANG C vs. NEXON Co
Performance |
| Timeline |
| CN DATANG C |
| NEXON Co |
CN DATANG and NEXON Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN DATANG and NEXON Co
The main advantage of trading using opposite CN DATANG and NEXON Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN DATANG position performs unexpectedly, NEXON Co 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 Co will offset losses from the drop in NEXON Co's long position.| CN DATANG vs. COMBA TELECOM SYST | CN DATANG vs. INDOFOOD AGRI RES | CN DATANG vs. TYSON FOODS A | CN DATANG vs. MOLSON RS BEVERAGE |
| NEXON Co vs. EMPEROR ENT HOTEL | NEXON Co vs. The Hongkong and | NEXON Co vs. ON SEMICONDUCTOR | NEXON Co vs. Xenia Hotels Resorts |
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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