Correlation Between JYP Entertainment and Barunson Entertainment
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Barunson 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 JYP Entertainment and Barunson Entertainment 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 Barunson Entertainment Arts, you can compare the effects of market volatilities on JYP Entertainment and Barunson 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 JYP Entertainment with a short position of Barunson Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Barunson Entertainment.
Diversification Opportunities for JYP Entertainment and Barunson Entertainment
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JYP and Barunson is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and Barunson Entertainment Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barunson Entertainment 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 Barunson Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barunson Entertainment has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Barunson Entertainment go up and down completely randomly.
Pair Corralation between JYP Entertainment and Barunson Entertainment
Assuming the 90 days trading horizon JYP Entertainment Corp is expected to generate 1.88 times more return on investment than Barunson Entertainment. However, JYP Entertainment is 1.88 times more volatile than Barunson Entertainment Arts. It trades about 0.36 of its potential returns per unit of risk. Barunson Entertainment Arts is currently generating about -0.2 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JYP Entertainment Corp vs. Barunson Entertainment Arts
Performance |
| Timeline |
| JYP Entertainment Corp |
| Barunson Entertainment |
JYP Entertainment and Barunson Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and Barunson Entertainment
The main advantage of trading using opposite JYP Entertainment and Barunson Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Barunson 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 Barunson Entertainment will offset losses from the drop in Barunson Entertainment's long position.| JYP Entertainment vs. Samsung Electronics Co | JYP Entertainment vs. Samsung Electronics Co | JYP Entertainment vs. LG Energy Solution | JYP Entertainment vs. SK Hynix |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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