Correlation Between TJ Media and Next Entertainment
Can any of the company-specific risk be diversified away by investing in both TJ Media 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 TJ Media and Next Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TJ media Co and Next Entertainment World, you can compare the effects of market volatilities on TJ Media 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 TJ Media with a short position of Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of TJ Media and Next Entertainment.
Diversification Opportunities for TJ Media and Next Entertainment
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 032540 and Next is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding TJ media Co 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 TJ Media 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 TJ media Co 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 TJ Media i.e., TJ Media and Next Entertainment go up and down completely randomly.
Pair Corralation between TJ Media and Next Entertainment
Assuming the 90 days trading horizon TJ media Co is expected to under-perform the Next Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, TJ media Co is 2.68 times less risky than Next Entertainment. The stock trades about -0.2 of its potential returns per unit of risk. The Next Entertainment World is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 235,500 in Next Entertainment World on September 3, 2024 and sell it today you would lose (1,000.00) from holding Next Entertainment World or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TJ media Co vs. Next Entertainment World
Performance |
| Timeline |
| TJ media |
| Next Entertainment World |
TJ Media and Next Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TJ Media and Next Entertainment
The main advantage of trading using opposite TJ Media and Next Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TJ Media 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.| TJ Media vs. Wave Electronics Co | TJ Media vs. Fine Besteel Co | TJ Media vs. Anam Electronics Co | TJ Media vs. Dongbu Steel Co |
| Next Entertainment vs. Korea New Network | Next Entertainment vs. ICD Co | Next Entertainment vs. DYPNF 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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