Correlation Between SohuCom and Nexon Co
Can any of the company-specific risk be diversified away by investing in both SohuCom 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 SohuCom and Nexon Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SohuCom and Nexon Co Ltd, you can compare the effects of market volatilities on SohuCom 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 SohuCom with a short position of Nexon Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of SohuCom and Nexon Co.
Diversification Opportunities for SohuCom and Nexon Co
Very poor diversification
The 3 months correlation between SohuCom and Nexon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SohuCom and Nexon Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexon Co and SohuCom 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 SohuCom 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 SohuCom i.e., SohuCom and Nexon Co go up and down completely randomly.
Pair Corralation between SohuCom and Nexon Co
Given the investment horizon of 90 days SohuCom is expected to generate 0.74 times more return on investment than Nexon Co. However, SohuCom is 1.35 times less risky than Nexon Co. It trades about -0.19 of its potential returns per unit of risk. Nexon Co Ltd is currently generating about -0.24 per unit of risk. If you would invest 1,389 in SohuCom on August 28, 2024 and sell it today you would lose (154.00) from holding SohuCom or give up 11.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SohuCom vs. Nexon Co Ltd
Performance |
| Timeline |
| SohuCom |
| Nexon Co |
SohuCom and Nexon Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SohuCom and Nexon Co
The main advantage of trading using opposite SohuCom and Nexon Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SohuCom 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.| SohuCom vs. Snail, Class A | SohuCom vs. Playstudios | SohuCom vs. Playtika Holding Corp | SohuCom vs. Doubledown Interactive Co |
| Nexon Co vs. GDEV Inc | Nexon Co vs. Doubledown Interactive Co | Nexon Co vs. Playstudios | Nexon Co 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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