Correlation Between NEXON Co and GungHo Online

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

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

Diversification Opportunities for NEXON Co and GungHo Online

-0.85

Correlation Coefficient

NEXON Co  GungHo Online

Pay attention - limited upside

The 3 months correlation between NEXON and GungHo is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding NEXON Co and GungHo Online Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GungHo Online Entert and NEXON Co 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 NEXON Co are associated (or correlated) with GungHo Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GungHo Online Entert has no effect on the direction of NEXON Co i.e., NEXON Co and GungHo Online go up and down completely randomly.

Pair Corralation between NEXON Co and GungHo Online

Assuming the 90 days horizon NEXON Co is expected to generate 1.84 times more return on investment than GungHo Online. However, NEXON Co is 1.84 times more volatile than GungHo Online Entertainment. It trades about 0.09 of its potential returns per unit of risk. GungHo Online Entertainment is currently generating about -0.18 per unit of risk. If you would invest  1,333  in NEXON Co on April 25, 2025 and sell it today you would earn a total of  187.00  from holding NEXON Co or generate 14.03% return on investment over 90 days.

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

NEXON Co  vs.  GungHo Online Entertainment

NEXON Co

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NEXON Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, NEXON Co reported solid returns over the last few months and may actually be approaching a breakup point.

GungHo Online Entert

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NEXON Co and GungHo Online

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

The idea behind NEXON Co and GungHo Online Entertainment 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.