Correlation Between NEXON and Carnegie Clean

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

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

Diversification Opportunities for NEXON and Carnegie Clean

0.11

Correlation Coefficient

NEXON  Carnegie Clean

Average diversification

The 3 months correlation between NEXON and Carnegie is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding NEXON Co and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy and NEXON 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 Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of NEXON i.e., NEXON and Carnegie Clean go up and down completely randomly.

Pair Corralation between NEXON and Carnegie Clean

Assuming the 90 days trading horizon NEXON Co is expected to generate 0.56 times more return on investment than Carnegie Clean. However, NEXON Co is 1.79 times less risky than Carnegie Clean. It trades about -0.03 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about -0.02 per unit of risk. If you would invest  1,370  in NEXON Co on December 30, 2024 and sell it today you would lose (110.00) from holding NEXON Co or give up 8.03% of portfolio value over 90 days.

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

NEXON Co  vs.  Carnegie Clean Energy

NEXON

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. In spite of comparatively stable basic indicators, NEXON is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Carnegie Clean Energy

Risk-Adjusted Performance

Weak

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

Pair Trading with NEXON and Carnegie Clean

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

The idea behind NEXON Co and Carnegie Clean Energy 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.