Correlation Between Alstria Office and NEXON

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

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

Diversification Opportunities for Alstria Office and NEXON

0.55

Correlation Coefficient

Alstria Office  NEXON

Very weak diversification

The 3 months correlation between Alstria and NEXON is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON and Alstria Office 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 alstria office REIT AG are associated (or correlated) with NEXON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON has no effect on the direction of Alstria Office i.e., Alstria Office and NEXON go up and down completely randomly.

Pair Corralation between Alstria Office and NEXON

Assuming the 90 days horizon alstria office REIT AG is expected to under-perform the NEXON. In addition to that, Alstria Office is 1.8 times more volatile than NEXON Co. It trades about -0.12 of its total potential returns per unit of risk. NEXON Co is currently generating about -0.04 per unit of volatility. If you would invest  1,371  in NEXON Co on December 22, 2024 and sell it today you would lose (91.00) from holding NEXON Co or give up 6.64% of portfolio value over 90 days.

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

alstria office REIT AG  vs.  NEXON Co

alstria office REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days alstria office REIT AG 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.

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.

Pair Trading with Alstria Office and NEXON

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

The idea behind alstria office REIT AG and NEXON Co 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.