Correlation Between Naver and Younglimwon Soft

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

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

Diversification Opportunities for Naver and Younglimwon Soft

0.72

Correlation Coefficient

Naver  Younglimwon Soft

Poor diversification

The 3 months correlation between Naver and Younglimwon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Naver and Younglimwon Soft Lab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Younglimwon Soft Lab and Naver 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 Naver are associated (or correlated) with Younglimwon Soft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Younglimwon Soft Lab has no effect on the direction of Naver i.e., Naver and Younglimwon Soft go up and down completely randomly.

Pair Corralation between Naver and Younglimwon Soft

Assuming the 90 days trading horizon Naver is expected to generate 1.81 times more return on investment than Younglimwon Soft. However, Naver is 1.81 times more volatile than Younglimwon Soft Lab. It trades about 0.04 of its potential returns per unit of risk. Younglimwon Soft Lab is currently generating about 0.02 per unit of risk. If you would invest  19,892,400  in Naver on December 25, 2024 and sell it today you would earn a total of  807,600  from holding Naver or generate 4.06% return on investment over 90 days.

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

Naver  vs.  Younglimwon Soft Lab

Naver

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Naver are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Naver is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Younglimwon Soft Lab

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Younglimwon Soft Lab are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Younglimwon Soft is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Naver and Younglimwon Soft

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

The idea behind Naver and Younglimwon Soft Lab 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .