Correlation Between Playgram and Nasmedia
Can any of the company-specific risk be diversified away by investing in both Playgram and Nasmedia 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 Playgram and Nasmedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playgram Co and Nasmedia Co, you can compare the effects of market volatilities on Playgram and Nasmedia 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 Playgram with a short position of Nasmedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playgram and Nasmedia.
Diversification Opportunities for Playgram and Nasmedia
Poor diversification
The 3 months correlation between Playgram and Nasmedia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Playgram Co and Nasmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasmedia and Playgram 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 Playgram Co are associated (or correlated) with Nasmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasmedia has no effect on the direction of Playgram i.e., Playgram and Nasmedia go up and down completely randomly.
Pair Corralation between Playgram and Nasmedia
Assuming the 90 days trading horizon Playgram Co is expected to generate 2.0 times more return on investment than Nasmedia. However, Playgram is 2.0 times more volatile than Nasmedia Co. It trades about -0.01 of its potential returns per unit of risk. Nasmedia Co is currently generating about -0.04 per unit of risk. If you would invest 81,200 in Playgram Co on August 25, 2024 and sell it today you would lose (42,800) from holding Playgram Co or give up 52.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playgram Co vs. Nasmedia Co
Performance |
| Timeline |
| Playgram |
| Nasmedia |
Playgram and Nasmedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playgram and Nasmedia
The main advantage of trading using opposite Playgram and Nasmedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playgram position performs unexpectedly, Nasmedia 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 Nasmedia will offset losses from the drop in Nasmedia's long position.| Playgram vs. LG Chemicals | Playgram vs. POSCO Holdings | Playgram vs. Lotte Chemical Corp | Playgram vs. Hyundai Steel |
| Nasmedia vs. Shinsegae Information Communication | Nasmedia vs. Korea Information Communications | Nasmedia vs. Wireless Power Amplifier | Nasmedia vs. Pan Entertainment Co |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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