Correlation Between Bitcoin and Kakao Games

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

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

Diversification Opportunities for Bitcoin and Kakao Games

0.36

Correlation Coefficient

Bitcoin  Kakao Games

Weak diversification

The 3 months correlation between Bitcoin and Kakao is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Kakao Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kakao Games Corp and Bitcoin 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 Bitcoin are associated (or correlated) with Kakao Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kakao Games Corp has no effect on the direction of Bitcoin i.e., Bitcoin and Kakao Games go up and down completely randomly.

Pair Corralation between Bitcoin and Kakao Games

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the Kakao Games. In addition to that, Bitcoin is 1.39 times more volatile than Kakao Games Corp. It trades about -0.09 of its total potential returns per unit of risk. Kakao Games Corp is currently generating about -0.12 per unit of volatility. If you would invest  1,784,000  in Kakao Games Corp on December 23, 2024 and sell it today you would lose (216,000) from holding Kakao Games Corp or give up 12.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.23%
Values	Daily Returns

Bitcoin  vs.  Kakao Games Corp

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Bitcoin shareholders.

Kakao Games Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kakao Games Corp 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bitcoin and Kakao Games

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

The idea behind Bitcoin and Kakao Games Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.