Correlation Between Nintendo and NEXON

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

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

Diversification Opportunities for Nintendo and NEXON

0.34

Correlation Coefficient

Nintendo  NEXON

Weak diversification

The 3 months correlation between Nintendo and NEXON is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Co and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON and Nintendo 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 Nintendo Co 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 Nintendo i.e., Nintendo and NEXON go up and down completely randomly.

Pair Corralation between Nintendo and NEXON

Assuming the 90 days horizon Nintendo Co is expected to under-perform the NEXON. But the stock apears to be less risky and, when comparing its historical volatility, Nintendo Co is 1.45 times less risky than NEXON. The stock trades about -0.04 of its potential returns per unit of risk. The NEXON Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,373  in NEXON Co on May 5, 2025 and sell it today you would earn a total of  237.00  from holding NEXON Co or generate 17.26% return on investment over 90 days.

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

Nintendo Co  vs.  NEXON Co

Nintendo

Risk-Adjusted Performance

Very Weak

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

NEXON

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. In spite of comparatively fragile basic indicators, NEXON unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nintendo and NEXON

The main advantage of trading using opposite Nintendo and NEXON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nintendo 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 Nintendo Co 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.