Correlation Between Empire Global and NetEase

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

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

Diversification Opportunities for Empire Global and NetEase

-0.38

Correlation Coefficient

Empire Global  NetEase

Very good diversification

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

Pair Corralation between Empire Global and NetEase

If you would invest  2,759  in NetEase on August 21, 2025 and sell it today you would lose (84.00) from holding NetEase or give up 3.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Empire Global Gaming  vs.  NetEase

Empire Global Gaming

Risk-Adjusted Performance

Weakest

Over the last 90 days Empire Global Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Empire Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NetEase

Risk-Adjusted Performance

Weakest

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

Pair Trading with Empire Global and NetEase

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

The idea behind Empire Global Gaming and NetEase 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.