Correlation Between NetEase Inc and Victory Square
Can any of the company-specific risk be diversified away by investing in both NetEase Inc and Victory Square 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 NetEase Inc and Victory Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEase and Victory Square Technologies, you can compare the effects of market volatilities on NetEase Inc and Victory Square 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 NetEase Inc with a short position of Victory Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase Inc and Victory Square.
Diversification Opportunities for NetEase Inc and Victory Square
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NetEase Inc and Victory is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and Victory Square Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Square Techn and NetEase Inc 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 NetEase are associated (or correlated) with Victory Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Square Techn has no effect on the direction of NetEase Inc i.e., NetEase Inc and Victory Square go up and down completely randomly.
Pair Corralation between NetEase Inc and Victory Square
Assuming the 90 days horizon NetEase Inc is expected to generate 5.59 times less return on investment than Victory Square. But when comparing it to its historical volatility, NetEase is 2.39 times less risky than Victory Square. It trades about 0.1 of its potential returns per unit of risk. Victory Square Technologies is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 7.96 in Victory Square Technologies on November 1, 2024 and sell it today you would earn a total of 21.04 from holding Victory Square Technologies or generate 264.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.77% |
| Values | Daily Returns |
NetEase vs. Victory Square Technologies
Performance |
| Timeline |
| NetEase Inc |
| Victory Square Techn |
NetEase Inc and Victory Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NetEase Inc and Victory Square
The main advantage of trading using opposite NetEase Inc and Victory Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase Inc position performs unexpectedly, Victory Square 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 Victory Square will offset losses from the drop in Victory Square's long position.| NetEase Inc vs. Bilibili | NetEase Inc vs. Electronic Arts | NetEase Inc vs. Take Two Interactive Software | NetEase Inc vs. SohuCom |
| Victory Square vs. GameSquare Holdings | Victory Square vs. Nexon Co Ltd | Victory Square vs. i3 Interactive | Victory Square vs. IGG Inc |
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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