Correlation Between NEXON Co and SEI INVESTMENTS

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

By analyzing existing cross correlation between NEXON Co and SEI INVESTMENTS, you can compare the effects of market volatilities on NEXON Co and SEI INVESTMENTS 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 SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXON Co and SEI INVESTMENTS.

Diversification Opportunities for NEXON Co and SEI INVESTMENTS

0.34

Correlation Coefficient

NEXON Co  SEI INVESTMENTS

Weak diversification

The 3 months correlation between NEXON and SEI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding NEXON Co and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of NEXON Co i.e., NEXON Co and SEI INVESTMENTS go up and down completely randomly.

Pair Corralation between NEXON Co and SEI INVESTMENTS

Assuming the 90 days horizon NEXON Co is expected to generate 2.17 times more return on investment than SEI INVESTMENTS. However, NEXON Co is 2.17 times more volatile than SEI INVESTMENTS. It trades about -0.02 of its potential returns per unit of risk. SEI INVESTMENTS is currently generating about -0.14 per unit of risk. If you would invest  1,335  in NEXON Co on December 20, 2024 and sell it today you would lose (75.00) from holding NEXON Co or give up 5.62% 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.  SEI INVESTMENTS

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 nearly stable basic indicators, NEXON Co is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SEI INVESTMENTS

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEI INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NEXON Co and SEI INVESTMENTS

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

The idea behind NEXON Co and SEI INVESTMENTS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.