Correlation Between Daishin Balance and Naver

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

By analyzing existing cross correlation between Daishin Balance No8 and Naver, you can compare the effects of market volatilities on Daishin Balance 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 Daishin Balance with a short position of Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Balance and Naver.

Diversification Opportunities for Daishin Balance and Naver

-0.9

Correlation Coefficient

Daishin Balance  Naver

Pay attention - limited upside

The 3 months correlation between Daishin and Naver is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Balance No8 and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and Daishin Balance 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 Daishin Balance No8 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 Daishin Balance i.e., Daishin Balance and Naver go up and down completely randomly.

Pair Corralation between Daishin Balance and Naver

Assuming the 90 days trading horizon Daishin Balance No8 is expected to under-perform the Naver. In addition to that, Daishin Balance is 1.86 times more volatile than Naver. It trades about -0.08 of its total potential returns per unit of risk. Naver is currently generating about 0.01 per unit of volatility. If you would invest  21,450,000  in Naver on September 12, 2024 and sell it today you would lose (550,000) from holding Naver or give up 2.56% of portfolio value over 90 days.

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

Daishin Balance No8  vs.  Naver

Daishin Balance No8

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daishin Balance No8 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Naver

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Naver are ranked lower than 20 (%) 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 Daishin Balance and Naver

The main advantage of trading using opposite Daishin Balance and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Balance 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 Daishin Balance No8 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.