Correlation Between NetEase Inc and Capcom Co

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NetEase Inc and Capcom 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 NetEase Inc and Capcom Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetEase and Capcom Co Ltd, you can compare the effects of market volatilities on NetEase Inc and Capcom 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 NetEase Inc with a short position of Capcom Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetEase Inc and Capcom Co.

Diversification Opportunities for NetEase Inc and Capcom Co

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between NetEase Inc and Capcom is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NetEase and Capcom Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capcom Co and NetEase Inc 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 NetEase are associated (or correlated) with Capcom Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capcom Co has no effect on the direction of NetEase Inc i.e., NetEase Inc and Capcom Co go up and down completely randomly.

Pair Corralation between NetEase Inc and Capcom Co

Assuming the 90 days horizon NetEase is expected to generate 3.19 times more return on investment than Capcom Co. However, NetEase Inc is 3.19 times more volatile than Capcom Co Ltd. It trades about 0.11 of its potential returns per unit of risk. Capcom Co Ltd is currently generating about 0.09 per unit of risk. If you would invest  2,072  in NetEase on April 26, 2025 and sell it today you would earn a total of  822.00  from holding NetEase or generate 39.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

NetEase  vs.  Capcom Co Ltd

 Performance 
       Timeline  
NetEase Inc 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in NetEase are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, NetEase Inc reported solid returns over the last few months and may actually be approaching a breakup point.
Capcom Co 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Capcom Co Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Capcom Co may actually be approaching a critical reversion point that can send shares even higher in August 2025.

NetEase Inc and Capcom Co Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NetEase Inc and Capcom Co

The main advantage of trading using opposite NetEase Inc and Capcom Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetEase Inc position performs unexpectedly, Capcom 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 Capcom Co will offset losses from the drop in Capcom Co's long position.
The idea behind NetEase and Capcom 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Stocks Directory
Find actively traded stocks across global markets
Fundamental Analysis
View fundamental data based on most recent published financial statements
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated