Correlation Between JYP Entertainment and Daou Technology
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Daou Technology 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 Daou Technology 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 Daou Technology, you can compare the effects of market volatilities on JYP Entertainment and Daou Technology 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 Daou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Daou Technology.
Diversification Opportunities for JYP Entertainment and Daou Technology
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JYP and Daou is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and Daou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Technology 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 Daou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Technology has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Daou Technology go up and down completely randomly.
Pair Corralation between JYP Entertainment and Daou Technology
Assuming the 90 days trading horizon JYP Entertainment Corp is expected to generate 2.46 times more return on investment than Daou Technology. However, JYP Entertainment is 2.46 times more volatile than Daou Technology. It trades about 0.04 of its potential returns per unit of risk. Daou Technology is currently generating about -0.03 per unit of risk. If you would invest 7,000,000 in JYP Entertainment Corp on September 3, 2024 and sell it today you would earn a total of 640,000 from holding JYP Entertainment Corp or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JYP Entertainment Corp vs. Daou Technology
Performance |
| Timeline |
| JYP Entertainment Corp |
| Daou Technology |
JYP Entertainment and Daou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and Daou Technology
The main advantage of trading using opposite JYP Entertainment and Daou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Daou Technology 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 Daou Technology will offset losses from the drop in Daou Technology's long position.| JYP Entertainment vs. Sungchang Autotech Co | JYP Entertainment vs. Alton Sports CoLtd | JYP Entertainment vs. FNSTech Co | JYP Entertainment vs. Lion Chemtech Co |
| Daou Technology vs. Sejong Telecom | Daou Technology vs. Nice Information Telecommunication | Daou Technology vs. Samji Electronics Co | Daou Technology vs. Shinsegae Information Communication |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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