Correlation Between Netmarble Games and Korea Information

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

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

Diversification Opportunities for Netmarble Games and Korea Information

0.43

Correlation Coefficient

Netmarble Games  Korea Information

Very weak diversification

The 3 months correlation between Netmarble and Korea is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Netmarble Games Corp and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information and Netmarble Games 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 Netmarble Games Corp are associated (or correlated) with Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Netmarble Games i.e., Netmarble Games and Korea Information go up and down completely randomly.

Pair Corralation between Netmarble Games and Korea Information

Assuming the 90 days trading horizon Netmarble Games Corp is expected to under-perform the Korea Information. In addition to that, Netmarble Games is 2.39 times more volatile than Korea Information Communications. It trades about -0.2 of its total potential returns per unit of risk. Korea Information Communications is currently generating about 0.01 per unit of volatility. If you would invest  778,000  in Korea Information Communications on December 25, 2024 and sell it today you would earn a total of  4,000  from holding Korea Information Communications or generate 0.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Netmarble Games Corp  vs.  Korea Information Communicatio

Netmarble Games Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netmarble Games Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Korea Information

Risk-Adjusted Performance

Weak

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

Pair Trading with Netmarble Games and Korea Information

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

The idea behind Netmarble Games Corp and Korea Information Communications 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.