Correlation Between NICE Information and Naver

Can any of the company-specific risk be diversified away by investing in both NICE Information and Naver 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 NICE Information and Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NICE Information Service and Naver, you can compare the effects of market volatilities on NICE Information and Naver 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 NICE Information with a short position of Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Information and Naver.

Diversification Opportunities for NICE Information and Naver

0.79

Correlation Coefficient

NICE Information  Naver

Poor diversification

The 3 months correlation between NICE and Naver is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and NICE Information 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 NICE Information Service are associated (or correlated) with Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of NICE Information i.e., NICE Information and Naver go up and down completely randomly.

Pair Corralation between NICE Information and Naver

Assuming the 90 days trading horizon NICE Information is expected to generate 1.61 times less return on investment than Naver. In addition to that, NICE Information is 1.02 times more volatile than Naver. It trades about 0.1 of its total potential returns per unit of risk. Naver is currently generating about 0.16 per unit of volatility. If you would invest  16,620,000  in Naver on October 8, 2024 and sell it today you would earn a total of  3,430,000  from holding Naver or generate 20.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

NICE Information Service  vs.  Naver

NICE Information Service

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NICE Information Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NICE Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Naver

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Naver are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Naver sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NICE Information and Naver

The main advantage of trading using opposite NICE Information and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICE Information position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.

The idea behind NICE Information Service and Naver 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.