Correlation Between Walker Dunlop and Kakao Games

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

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

Diversification Opportunities for Walker Dunlop and Kakao Games

-0.33

Correlation Coefficient

Walker Dunlop  Kakao Games

Very good diversification

The 3 months correlation between Walker and Kakao is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Kakao Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kakao Games Corp and Walker Dunlop 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 Walker Dunlop are associated (or correlated) with Kakao Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kakao Games Corp has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Kakao Games go up and down completely randomly.

Pair Corralation between Walker Dunlop and Kakao Games

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 0.62 times more return on investment than Kakao Games. However, Walker Dunlop is 1.62 times less risky than Kakao Games. It trades about -0.01 of its potential returns per unit of risk. Kakao Games Corp is currently generating about -0.07 per unit of risk. If you would invest  10,822  in Walker Dunlop on August 18, 2024 and sell it today you would lose (160.00) from holding Walker Dunlop or give up 1.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.64%
Values	Daily Returns

Walker Dunlop  vs.  Kakao Games Corp

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Walker Dunlop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kakao Games Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kakao Games Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Walker Dunlop and Kakao Games

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

The idea behind Walker Dunlop and Kakao Games Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.