Correlation Between NAU IB and Naver

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

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

Diversification Opportunities for NAU IB and Naver

-0.15

Correlation Coefficient

NAU IB  Naver

Good diversification

The 3 months correlation between NAU and Naver is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding NAU IB Capital and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and NAU IB 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 NAU IB Capital 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 NAU IB i.e., NAU IB and Naver go up and down completely randomly.

Pair Corralation between NAU IB and Naver

Assuming the 90 days trading horizon NAU IB Capital is expected to under-perform the Naver. In addition to that, NAU IB is 2.58 times more volatile than Naver. It trades about -0.01 of its total potential returns per unit of risk. Naver is currently generating about 0.0 per unit of volatility. If you would invest  19,792,900  in Naver on December 30, 2024 and sell it today you would lose (322,900) from holding Naver or give up 1.63% of portfolio value over 90 days.

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

NAU IB Capital  vs.  Naver

NAU IB Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAU IB Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NAU IB 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

Very Weak

Over the last 90 days Naver has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with NAU IB and Naver

The main advantage of trading using opposite NAU IB and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAU IB 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 NAU IB Capital 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..