Correlation Between Take Two and NetEase
Can any of the company-specific risk be diversified away by investing in both Take Two 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 Take Two and NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and NetEase, you can compare the effects of market volatilities on Take Two 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 Take Two with a short position of NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and NetEase.
Diversification Opportunities for Take Two and NetEase
Modest diversification
The 3 months correlation between Take and NetEase is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and Take Two 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 Take Two Interactive Software 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 Take Two i.e., Take Two and NetEase go up and down completely randomly.
Pair Corralation between Take Two and NetEase
Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 1.06 times more return on investment than NetEase. However, Take Two is 1.06 times more volatile than NetEase. It trades about 0.17 of its potential returns per unit of risk. NetEase is currently generating about 0.09 per unit of risk. If you would invest 22,649 in Take Two Interactive Software on June 8, 2025 and sell it today you would earn a total of 1,416 from holding Take Two Interactive Software or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. NetEase
Performance |
| Timeline |
| Take Two Interactive |
| NetEase |
Take Two and NetEase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and NetEase
The main advantage of trading using opposite Take Two and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two 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.| Take Two vs. Electronic Arts | Take Two vs. Nintendo Co ADR | Take Two vs. Roblox Corp | Take Two vs. NetEase |
| NetEase vs. Bilibili | NetEase vs. Electronic Arts | NetEase vs. Take Two Interactive Software | NetEase vs. SohuCom |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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