Correlation Between SEALED AIR and NEXON

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

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

Diversification Opportunities for SEALED AIR and NEXON

-0.63

Correlation Coefficient

SEALED AIR  NEXON

Excellent diversification

The 3 months correlation between SEALED and NEXON is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON and SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and NEXON go up and down completely randomly.

Pair Corralation between SEALED AIR and NEXON

Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the NEXON. But the stock apears to be less risky and, when comparing its historical volatility, SEALED AIR is 1.95 times less risky than NEXON. The stock trades about -0.24 of its potential returns per unit of risk. The NEXON Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,310  in NEXON Co on October 9, 2024 and sell it today you would earn a total of  20.00  from holding NEXON Co or generate 1.53% return on investment over 90 days.

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

SEALED AIR   vs.  NEXON Co

SEALED AIR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SEALED AIR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

NEXON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEXON Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SEALED AIR and NEXON

The main advantage of trading using opposite SEALED AIR and NEXON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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 SEALED AIR 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.