Correlation Between Asiana Airlines and Next Entertainment
Can any of the company-specific risk be diversified away by investing in both Asiana Airlines and Next 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 Asiana Airlines and Next Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asiana Airlines and Next Entertainment World, you can compare the effects of market volatilities on Asiana Airlines and Next 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 Asiana Airlines with a short position of Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiana Airlines and Next Entertainment.
Diversification Opportunities for Asiana Airlines and Next Entertainment
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asiana and Next is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Asiana Airlines and Next Entertainment World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Entertainment World and Asiana Airlines 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 Asiana Airlines are associated (or correlated) with Next Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Entertainment World has no effect on the direction of Asiana Airlines i.e., Asiana Airlines and Next Entertainment go up and down completely randomly.
Pair Corralation between Asiana Airlines and Next Entertainment
Assuming the 90 days trading horizon Asiana Airlines is expected to generate 2.34 times less return on investment than Next Entertainment. But when comparing it to its historical volatility, Asiana Airlines is 2.86 times less risky than Next Entertainment. It trades about 0.06 of its potential returns per unit of risk. Next Entertainment World is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 214,000 in Next Entertainment World on November 30, 2024 and sell it today you would earn a total of 10,500 from holding Next Entertainment World or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asiana Airlines vs. Next Entertainment World
Performance |
| Timeline |
| Asiana Airlines |
| Next Entertainment World |
Asiana Airlines and Next Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asiana Airlines and Next Entertainment
The main advantage of trading using opposite Asiana Airlines and Next Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asiana Airlines position performs unexpectedly, Next 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 Next Entertainment will offset losses from the drop in Next Entertainment's long position.| Asiana Airlines vs. Wonil Special Steel | Asiana Airlines vs. Husteel | Asiana Airlines vs. Lotte Rental Co | Asiana Airlines vs. Fine Besteel Co |
| Next Entertainment vs. Com2uS | Next Entertainment vs. NEOWIZ | Next Entertainment vs. Wemade CoLtd | Next Entertainment vs. Busan Industrial 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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