Correlation Between JYP Entertainment and Dongbu Steel
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Dongbu Steel 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 JYP Entertainment and Dongbu Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JYP Entertainment Corp and Dongbu Steel Co, you can compare the effects of market volatilities on JYP Entertainment and Dongbu Steel 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 JYP Entertainment with a short position of Dongbu Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Dongbu Steel.
Diversification Opportunities for JYP Entertainment and Dongbu Steel
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between JYP and Dongbu is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and Dongbu Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbu Steel and JYP Entertainment 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 JYP Entertainment Corp are associated (or correlated) with Dongbu Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbu Steel has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Dongbu Steel go up and down completely randomly.
Pair Corralation between JYP Entertainment and Dongbu Steel
Assuming the 90 days trading horizon JYP Entertainment Corp is expected to generate 1.52 times more return on investment than Dongbu Steel. However, JYP Entertainment is 1.52 times more volatile than Dongbu Steel Co. It trades about 0.35 of its potential returns per unit of risk. Dongbu Steel Co is currently generating about -0.1 per unit of risk. If you would invest 5,120,000 in JYP Entertainment Corp on August 25, 2024 and sell it today you would earn a total of 1,490,000 from holding JYP Entertainment Corp or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JYP Entertainment Corp vs. Dongbu Steel Co
Performance |
| Timeline |
| JYP Entertainment Corp |
| Dongbu Steel |
JYP Entertainment and Dongbu Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and Dongbu Steel
The main advantage of trading using opposite JYP Entertainment and Dongbu Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Dongbu Steel 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 Dongbu Steel will offset losses from the drop in Dongbu Steel's long position.| JYP Entertainment vs. Digital Power Communications | JYP Entertainment vs. SK Telecom Co | JYP Entertainment vs. Woorim Machinery Co | JYP Entertainment vs. LG Household Healthcare |
| Dongbu Steel vs. LG Chemicals | Dongbu Steel vs. POSCO Holdings | Dongbu Steel vs. Lotte Chemical Corp | Dongbu Steel vs. Hyundai Steel |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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