Correlation Between Daou Technology and JYP Entertainment
Can any of the company-specific risk be diversified away by investing in both Daou Technology 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 Daou Technology and JYP Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daou Technology and JYP Entertainment Corp, you can compare the effects of market volatilities on Daou Technology 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 Daou Technology with a short position of JYP Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daou Technology and JYP Entertainment.
Diversification Opportunities for Daou Technology and JYP Entertainment
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daou and JYP is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Daou Technology 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 Daou Technology 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 Daou Technology 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 Daou Technology i.e., Daou Technology and JYP Entertainment go up and down completely randomly.
Pair Corralation between Daou Technology and JYP Entertainment
Assuming the 90 days trading horizon Daou Technology is expected to under-perform the JYP Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Daou Technology is 1.65 times less risky than JYP Entertainment. The stock trades about -0.01 of its potential returns per unit of risk. The JYP Entertainment Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6,819,983 in JYP Entertainment Corp on October 17, 2024 and sell it today you would earn a total of 760,017 from holding JYP Entertainment Corp or generate 11.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daou Technology vs. JYP Entertainment Corp
Performance |
| Timeline |
| Daou Technology |
| JYP Entertainment Corp |
Daou Technology and JYP Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daou Technology and JYP Entertainment
The main advantage of trading using opposite Daou Technology and JYP Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daou Technology 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.| Daou Technology vs. Dongil Metal Co | Daou Technology vs. Korean Drug Co | Daou Technology vs. Kg Chemical | Daou Technology vs. JC Chemical Co |
| JYP Entertainment vs. Union Materials Corp | JYP Entertainment vs. Phoenix Materials Co | JYP Entertainment vs. Daou Technology | JYP Entertainment vs. EV Advanced Material |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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