Correlation Between Nexon Co and Square Enix
Can any of the company-specific risk be diversified away by investing in both Nexon Co and Square Enix 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 Square Enix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexon Co Ltd and Square Enix Holdings, you can compare the effects of market volatilities on Nexon Co and Square Enix 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 Square Enix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexon Co and Square Enix.
Diversification Opportunities for Nexon Co and Square Enix
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nexon and Square is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nexon Co Ltd and Square Enix Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Square Enix Holdings 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 Ltd are associated (or correlated) with Square Enix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Square Enix Holdings has no effect on the direction of Nexon Co i.e., Nexon Co and Square Enix go up and down completely randomly.
Pair Corralation between Nexon Co and Square Enix
Assuming the 90 days horizon Nexon Co Ltd is expected to under-perform the Square Enix. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nexon Co Ltd is 1.05 times less risky than Square Enix. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Square Enix Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,500 in Square Enix Holdings on August 28, 2024 and sell it today you would lose (357.00) from holding Square Enix Holdings or give up 7.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.44% |
| Values | Daily Returns |
Nexon Co Ltd vs. Square Enix Holdings
Performance |
| Timeline |
| Nexon Co |
| Square Enix Holdings |
Nexon Co and Square Enix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexon Co and Square Enix
The main advantage of trading using opposite Nexon Co and Square Enix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexon Co position performs unexpectedly, Square Enix 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 Square Enix will offset losses from the drop in Square Enix's long position.| Nexon Co vs. GDEV Inc | Nexon Co vs. Doubledown Interactive Co | Nexon Co vs. Playstudios | Nexon Co vs. SohuCom |
| Square Enix vs. GDEV Inc | Square Enix vs. Doubledown Interactive Co | Square Enix vs. Playstudios | Square Enix vs. SohuCom |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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