Correlation Between NEXON Co and PLAYTIKA HOLDING

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

By analyzing existing cross correlation between NEXON Co and PLAYTIKA HOLDING DL 01, you can compare the effects of market volatilities on NEXON Co and PLAYTIKA HOLDING 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 NEXON Co with a short position of PLAYTIKA HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXON Co and PLAYTIKA HOLDING.

Diversification Opportunities for NEXON Co and PLAYTIKA HOLDING

0.39

Correlation Coefficient

NEXON Co  PLAYTIKA HOLDING

Weak diversification

The 3 months correlation between NEXON and PLAYTIKA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding NEXON Co and PLAYTIKA HOLDING DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTIKA HOLDING and NEXON Co 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 NEXON Co are associated (or correlated) with PLAYTIKA HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTIKA HOLDING has no effect on the direction of NEXON Co i.e., NEXON Co and PLAYTIKA HOLDING go up and down completely randomly.

Pair Corralation between NEXON Co and PLAYTIKA HOLDING

Assuming the 90 days horizon NEXON Co is expected to generate 0.86 times more return on investment than PLAYTIKA HOLDING. However, NEXON Co is 1.16 times less risky than PLAYTIKA HOLDING. It trades about -0.04 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about -0.11 per unit of risk. If you would invest  1,380  in NEXON Co on December 30, 2024 and sell it today you would lose (130.00) from holding NEXON Co or give up 9.42% of portfolio value over 90 days.

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

NEXON Co  vs.  PLAYTIKA HOLDING DL 01

NEXON Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEXON Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PLAYTIKA HOLDING

Risk-Adjusted Performance

Very Weak

Over the last 90 days PLAYTIKA HOLDING DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NEXON Co and PLAYTIKA HOLDING

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

The idea behind NEXON Co and PLAYTIKA HOLDING DL 01 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.