Correlation Between JYP Entertainment and Digital Power
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Digital Power 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 Digital Power 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 Digital Power Communications, you can compare the effects of market volatilities on JYP Entertainment and Digital Power 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 Digital Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Digital Power.
Diversification Opportunities for JYP Entertainment and Digital Power
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JYP and Digital is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and Digital Power Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Power Commun 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 Digital Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Power Commun has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Digital Power go up and down completely randomly.
Pair Corralation between JYP Entertainment and Digital Power
Assuming the 90 days trading horizon JYP Entertainment Corp is expected to generate 1.72 times more return on investment than Digital Power. However, JYP Entertainment is 1.72 times more volatile than Digital Power Communications. It trades about 0.44 of its potential returns per unit of risk. Digital Power Communications is currently generating about 0.02 per unit of risk. If you would invest 5,080,000 in JYP Entertainment Corp on August 29, 2024 and sell it today you would earn a total of 1,900,000 from holding JYP Entertainment Corp or generate 37.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JYP Entertainment Corp vs. Digital Power Communications
Performance |
| Timeline |
| JYP Entertainment Corp |
| Digital Power Commun |
JYP Entertainment and Digital Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and Digital Power
The main advantage of trading using opposite JYP Entertainment and Digital Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Digital Power 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 Digital Power will offset losses from the drop in Digital Power's long position.| JYP Entertainment vs. PH Tech Co | JYP Entertainment vs. A Tech Solution Co | JYP Entertainment vs. SS TECH | JYP Entertainment vs. Ecoplastic |
| Digital Power vs. National Plastic Co | Digital Power vs. LS Materials | Digital Power vs. Automobile Pc | Digital Power vs. Alton Sports CoLtd |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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