Correlation Between EAST SIDE and NEXON

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

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

Diversification Opportunities for EAST SIDE and NEXON

0.66

Correlation Coefficient

EAST SIDE  NEXON

Poor diversification

The 3 months correlation between EAST and NEXON is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding EAST SIDE GAMES and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON and EAST SIDE 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 EAST SIDE GAMES 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 EAST SIDE i.e., EAST SIDE and NEXON go up and down completely randomly.

Pair Corralation between EAST SIDE and NEXON

Assuming the 90 days horizon EAST SIDE GAMES is expected to generate 1.74 times more return on investment than NEXON. However, EAST SIDE is 1.74 times more volatile than NEXON Co. It trades about -0.02 of its potential returns per unit of risk. NEXON Co is currently generating about -0.13 per unit of risk. If you would invest  45.00  in EAST SIDE GAMES on September 12, 2024 and sell it today you would lose (5.00) from holding EAST SIDE GAMES or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

EAST SIDE GAMES  vs.  NEXON Co

EAST SIDE GAMES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EAST SIDE GAMES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EAST SIDE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EAST SIDE and NEXON

The main advantage of trading using opposite EAST SIDE and NEXON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAST SIDE 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 EAST SIDE GAMES 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.