Correlation Between INNOX Advanced and Naver

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

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

Diversification Opportunities for INNOX Advanced and Naver

-0.84

Correlation Coefficient

INNOX Advanced  Naver

Pay attention - limited upside

The 3 months correlation between INNOX and Naver is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding INNOX Advanced Materials and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and INNOX Advanced 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 INNOX Advanced Materials 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 INNOX Advanced i.e., INNOX Advanced and Naver go up and down completely randomly.

Pair Corralation between INNOX Advanced and Naver

Assuming the 90 days trading horizon INNOX Advanced Materials is expected to generate 1.06 times more return on investment than Naver. However, INNOX Advanced is 1.06 times more volatile than Naver. It trades about 0.42 of its potential returns per unit of risk. Naver is currently generating about -0.01 per unit of risk. If you would invest  1,895,480  in INNOX Advanced Materials on October 11, 2024 and sell it today you would earn a total of  429,520  from holding INNOX Advanced Materials or generate 22.66% return on investment over 90 days.

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

INNOX Advanced Materials  vs.  Naver

INNOX Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INNOX Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INNOX Advanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Naver

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Naver are ranked lower than 11 (%) 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 INNOX Advanced and Naver

The main advantage of trading using opposite INNOX Advanced and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INNOX Advanced 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 INNOX Advanced Materials 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.