Correlation Between Seoul Broadcasting and YG Entertainment
Can any of the company-specific risk be diversified away by investing in both Seoul Broadcasting and YG 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 Seoul Broadcasting and YG Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Broadcasting System and YG Entertainment, you can compare the effects of market volatilities on Seoul Broadcasting and YG 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 Seoul Broadcasting with a short position of YG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Broadcasting and YG Entertainment.
Diversification Opportunities for Seoul Broadcasting and YG Entertainment
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seoul and 122870 is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Broadcasting System and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment and Seoul Broadcasting 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 Seoul Broadcasting System are associated (or correlated) with YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of Seoul Broadcasting i.e., Seoul Broadcasting and YG Entertainment go up and down completely randomly.
Pair Corralation between Seoul Broadcasting and YG Entertainment
Assuming the 90 days trading horizon Seoul Broadcasting is expected to generate 1.35 times less return on investment than YG Entertainment. But when comparing it to its historical volatility, Seoul Broadcasting System is 2.55 times less risky than YG Entertainment. It trades about 0.16 of its potential returns per unit of risk. YG Entertainment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,315,000 in YG Entertainment on September 13, 2024 and sell it today you would earn a total of 180,000 from holding YG Entertainment or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Broadcasting System vs. YG Entertainment
Performance |
| Timeline |
| Seoul Broadcasting System |
| YG Entertainment |
Seoul Broadcasting and YG Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Broadcasting and YG Entertainment
The main advantage of trading using opposite Seoul Broadcasting and YG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Broadcasting position performs unexpectedly, YG 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 YG Entertainment will offset losses from the drop in YG Entertainment's long position.| Seoul Broadcasting vs. Stic Investments | Seoul Broadcasting vs. MediaZen | Seoul Broadcasting vs. EBEST Investment Securities | Seoul Broadcasting vs. YG Entertainment |
| YG Entertainment vs. JYP Entertainment | YG Entertainment vs. Cube Entertainment | YG Entertainment vs. FNC Entertainment 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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