Correlation Between TRON and Kakao Games
Can any of the company-specific risk be diversified away by investing in both TRON and Kakao Games 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 TRON and Kakao Games into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and Kakao Games Corp, you can compare the effects of market volatilities on TRON and Kakao Games 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 TRON with a short position of Kakao Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and Kakao Games.
Diversification Opportunities for TRON and Kakao Games
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TRON and Kakao is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Kakao Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kakao Games Corp and TRON 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 TRON are associated (or correlated) with Kakao Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kakao Games Corp has no effect on the direction of TRON i.e., TRON and Kakao Games go up and down completely randomly.
Pair Corralation between TRON and Kakao Games
Assuming the 90 days trading horizon TRON is expected to under-perform the Kakao Games. But the crypto coin apears to be less risky and, when comparing its historical volatility, TRON is 1.19 times less risky than Kakao Games. The crypto coin trades about -0.15 of its potential returns per unit of risk. The Kakao Games Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,748,000 in Kakao Games Corp on October 11, 2024 and sell it today you would lose (69,000) from holding Kakao Games Corp or give up 3.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
TRON vs. Kakao Games Corp
Performance |
| Timeline |
| TRON |
| Kakao Games Corp |
TRON and Kakao Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and Kakao Games
The main advantage of trading using opposite TRON and Kakao Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, Kakao Games 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 Kakao Games will offset losses from the drop in Kakao Games' long position.The idea behind TRON and Kakao Games Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Kakao Games as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Kakao Games' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Kakao Games' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Kakao Games Corp.
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |