Correlation Between Dongbu Steel and JYP Entertainment
Can any of the company-specific risk be diversified away by investing in both Dongbu Steel and JYP Entertainment 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 Dongbu Steel and JYP Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbu Steel Co and JYP Entertainment Corp, you can compare the effects of market volatilities on Dongbu Steel and JYP Entertainment 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 Dongbu Steel with a short position of JYP Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbu Steel and JYP Entertainment.
Diversification Opportunities for Dongbu Steel and JYP Entertainment
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dongbu and JYP is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dongbu Steel Co and JYP Entertainment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JYP Entertainment Corp and Dongbu Steel 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 Dongbu Steel Co are associated (or correlated) with JYP Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JYP Entertainment Corp has no effect on the direction of Dongbu Steel i.e., Dongbu Steel and JYP Entertainment go up and down completely randomly.
Pair Corralation between Dongbu Steel and JYP Entertainment
Assuming the 90 days trading horizon Dongbu Steel Co is expected to under-perform the JYP Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Dongbu Steel Co is 1.52 times less risky than JYP Entertainment. The stock trades about -0.1 of its potential returns per unit of risk. The JYP Entertainment Corp is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 5,120,000 in JYP Entertainment Corp on August 25, 2024 and sell it today you would earn a total of 1,490,000 from holding JYP Entertainment Corp or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbu Steel Co vs. JYP Entertainment Corp
Performance |
| Timeline |
| Dongbu Steel |
| JYP Entertainment Corp |
Dongbu Steel and JYP Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbu Steel and JYP Entertainment
The main advantage of trading using opposite Dongbu Steel and JYP Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbu Steel position performs unexpectedly, JYP Entertainment 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 JYP Entertainment will offset losses from the drop in JYP Entertainment's long position.| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Lotte Chemical Corp | Dongbu Steel vs. Hyundai Steel |
| JYP Entertainment vs. Digital Power Communications | JYP Entertainment vs. SK Telecom Co | JYP Entertainment vs. Woorim Machinery Co | JYP Entertainment vs. LG Household Healthcare |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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