Correlation Between KCC Engineering and JYP Entertainment
Can any of the company-specific risk be diversified away by investing in both KCC Engineering 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 KCC Engineering and JYP Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCC Engineering Construction and JYP Entertainment Corp, you can compare the effects of market volatilities on KCC Engineering 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 KCC Engineering with a short position of JYP Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCC Engineering and JYP Entertainment.
Diversification Opportunities for KCC Engineering and JYP Entertainment
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KCC and JYP is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding KCC Engineering Construction 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 KCC Engineering 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 KCC Engineering Construction 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 KCC Engineering i.e., KCC Engineering and JYP Entertainment go up and down completely randomly.
Pair Corralation between KCC Engineering and JYP Entertainment
Assuming the 90 days trading horizon KCC Engineering Construction is expected to generate 0.29 times more return on investment than JYP Entertainment. However, KCC Engineering Construction is 3.47 times less risky than JYP Entertainment. It trades about 0.15 of its potential returns per unit of risk. JYP Entertainment Corp is currently generating about -0.05 per unit of risk. If you would invest 394,312 in KCC Engineering Construction on October 14, 2024 and sell it today you would earn a total of 10,188 from holding KCC Engineering Construction or generate 2.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
KCC Engineering Construction vs. JYP Entertainment Corp
Performance |
Timeline |
KCC Engineering Cons |
JYP Entertainment Corp |
KCC Engineering and JYP Entertainment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KCC Engineering and JYP Entertainment
The main advantage of trading using opposite KCC Engineering and JYP Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCC Engineering 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.KCC Engineering vs. Hanjoo Light Metal | KCC Engineering vs. Kakao Games Corp | KCC Engineering vs. Shinhan Inverse Silver | KCC Engineering vs. Hanwha Life Insurance |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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