Correlation Between Aristocrat Leisure and Nexon Co

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

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

Diversification Opportunities for Aristocrat Leisure and Nexon Co

0.14

Correlation Coefficient

Aristocrat Leisure  Nexon Co

Average diversification

The 3 months correlation between Aristocrat and Nexon is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Nexon Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexon Co and Aristocrat Leisure 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 Aristocrat Leisure Limited are associated (or correlated) with Nexon Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexon Co has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Nexon Co go up and down completely randomly.

Pair Corralation between Aristocrat Leisure and Nexon Co

Assuming the 90 days horizon Aristocrat Leisure is expected to generate 2.39 times less return on investment than Nexon Co. But when comparing it to its historical volatility, Aristocrat Leisure Limited is 1.11 times less risky than Nexon Co. It trades about 0.05 of its potential returns per unit of risk. Nexon Co Ltd is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,564  in Nexon Co Ltd on May 7, 2025 and sell it today you would earn a total of  350.00  from holding Nexon Co Ltd or generate 22.38% return on investment over 90 days.

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

Aristocrat Leisure Limited  vs.  Nexon Co Ltd

Aristocrat Leisure

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Leisure Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aristocrat Leisure may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Nexon Co

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Nexon Co Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nexon Co showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aristocrat Leisure and Nexon Co

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

The idea behind Aristocrat Leisure Limited and Nexon Co Ltd 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.