Correlation Between NAVER Corp and Meta Platforms

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

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

Diversification Opportunities for NAVER Corp and Meta Platforms

-0.38

Correlation Coefficient

NAVER Corp  Meta Platforms

Very good diversification

The 3 months correlation between NAVER and Meta is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NAVER Corp and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and NAVER Corp 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 NAVER Corp are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of NAVER Corp i.e., NAVER Corp and Meta Platforms go up and down completely randomly.

Pair Corralation between NAVER Corp and Meta Platforms

Assuming the 90 days horizon NAVER Corp is expected to generate 4.73 times less return on investment than Meta Platforms. But when comparing it to its historical volatility, NAVER Corp is 23.59 times less risky than Meta Platforms. It trades about 0.13 of its potential returns per unit of risk. Meta Platforms is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  59,928  in Meta Platforms on December 27, 2024 and sell it today you would earn a total of  1,170  from holding Meta Platforms or generate 1.95% return on investment over 90 days.

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

NAVER Corp  vs.  Meta Platforms

NAVER Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NAVER Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, NAVER Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Meta Platforms

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Meta Platforms is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NAVER Corp and Meta Platforms

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

The idea behind NAVER Corp and Meta Platforms 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.