Correlation Between JYP Entertainment and Shinsegae Engineering
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Shinsegae Engineering 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 Shinsegae Engineering 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 Shinsegae Engineering Construction, you can compare the effects of market volatilities on JYP Entertainment and Shinsegae Engineering 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 Shinsegae Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Shinsegae Engineering.
Diversification Opportunities for JYP Entertainment and Shinsegae Engineering
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JYP and Shinsegae is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and Shinsegae Engineering Construc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Engineering 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 Shinsegae Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Engineering has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Shinsegae Engineering go up and down completely randomly.
Pair Corralation between JYP Entertainment and Shinsegae Engineering
Assuming the 90 days trading horizon JYP Entertainment Corp is expected to generate 69.22 times more return on investment than Shinsegae Engineering. However, JYP Entertainment is 69.22 times more volatile than Shinsegae Engineering Construction. It trades about 0.16 of its potential returns per unit of risk. Shinsegae Engineering Construction is currently generating about 0.33 per unit of risk. If you would invest 7,000,000 in JYP Entertainment Corp on October 21, 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JYP Entertainment Corp vs. Shinsegae Engineering Construc
Performance |
| Timeline |
| JYP Entertainment Corp |
| Shinsegae Engineering |
JYP Entertainment and Shinsegae Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and Shinsegae Engineering
The main advantage of trading using opposite JYP Entertainment and Shinsegae Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Shinsegae Engineering 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 Shinsegae Engineering will offset losses from the drop in Shinsegae Engineering's long position.| JYP Entertainment vs. Shinsegae Food | JYP Entertainment vs. Haitai Confectionery Foods | JYP Entertainment vs. FoodNamoo | JYP Entertainment vs. Youl Chon Chemical |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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