Correlation Between NetEase and NEXON Co
Can any of the company-specific risk be diversified away by investing in both NetEase 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 NetEase and NEXON Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEase and NEXON Co, you can compare the effects of market volatilities on NetEase 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 NetEase with a short position of NEXON Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase and NEXON Co.
Diversification Opportunities for NetEase and NEXON Co
Very good diversification
The 3 months correlation between NetEase and NEXON is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON Co and NetEase 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 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 NetEase i.e., NetEase and NEXON Co go up and down completely randomly.
Pair Corralation between NetEase and NEXON Co
Given the investment horizon of 90 days NetEase is expected to generate 0.79 times more return on investment than NEXON Co. However, NetEase is 1.26 times less risky than NEXON Co. It trades about 0.14 of its potential returns per unit of risk. NEXON Co is currently generating about -0.14 per unit of risk. If you would invest 8,067 in NetEase on October 26, 2024 and sell it today you would earn a total of 1,878 from holding NetEase or generate 23.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NetEase vs. NEXON Co
Performance |
| Timeline |
| NetEase |
| NEXON Co |
NetEase and NEXON Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NetEase and NEXON Co
The main advantage of trading using opposite NetEase and NEXON Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase 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.| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
| NEXON Co vs. Konami Holdings | NEXON Co vs. Sega Sammy Holdings | NEXON Co vs. i3 Interactive | NEXON Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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