Correlation Between NEXON Co and Capcom Co
Can any of the company-specific risk be diversified away by investing in both NEXON Co and Capcom 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 NEXON Co and Capcom Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXON Co and Capcom Co, you can compare the effects of market volatilities on NEXON Co and Capcom 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 NEXON Co with a short position of Capcom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXON Co and Capcom Co.
Diversification Opportunities for NEXON Co and Capcom Co
Weak diversification
The 3 months correlation between NEXON and Capcom is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NEXON Co and Capcom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capcom Co 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 Capcom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capcom Co has no effect on the direction of NEXON Co i.e., NEXON Co and Capcom Co go up and down completely randomly.
Pair Corralation between NEXON Co and Capcom Co
Assuming the 90 days horizon NEXON Co is expected to under-perform the Capcom Co. But the pink sheet apears to be less risky and, when comparing its historical volatility, NEXON Co is 7.58 times less risky than Capcom Co. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Capcom Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,076 in Capcom Co on August 28, 2024 and sell it today you would lose (1,022) from holding Capcom Co or give up 33.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.5% |
| Values | Daily Returns |
NEXON Co vs. Capcom Co
Performance |
| Timeline |
| NEXON Co |
| Capcom Co |
NEXON Co and Capcom Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXON Co and Capcom Co
The main advantage of trading using opposite NEXON Co and Capcom Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXON Co position performs unexpectedly, Capcom 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 Capcom Co will offset losses from the drop in Capcom Co's long position.| NEXON Co vs. Konami Holdings | NEXON Co vs. Sega Sammy Holdings | NEXON Co vs. i3 Interactive | NEXON Co vs. IGG Inc |
| Capcom Co vs. Square Enix Holdings | Capcom Co vs. CD Projekt SA | Capcom Co vs. Sega Sammy Holdings | Capcom Co 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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