Correlation Between JYP Entertainment and PH Tech

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Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and PH Tech 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 PH Tech 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 PH Tech Co, you can compare the effects of market volatilities on JYP Entertainment and PH Tech 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 PH Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and PH Tech.

Diversification Opportunities for JYP Entertainment and PH Tech

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between JYP and 239890 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and PH Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PH Tech 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 PH Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PH Tech has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and PH Tech go up and down completely randomly.

Pair Corralation between JYP Entertainment and PH Tech

Assuming the 90 days trading horizon JYP Entertainment Corp is expected to generate 0.86 times more return on investment than PH Tech. However, JYP Entertainment Corp is 1.16 times less risky than PH Tech. It trades about -0.05 of its potential returns per unit of risk. PH Tech Co is currently generating about -0.1 per unit of risk. If you would invest  10,856,300  in JYP Entertainment Corp on August 25, 2024 and sell it today you would lose (4,246,300) from holding JYP Entertainment Corp or give up 39.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

JYP Entertainment Corp  vs.  PH Tech Co

 Performance 
       Timeline  
JYP Entertainment Corp 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JYP Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.
PH Tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PH Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

JYP Entertainment and PH Tech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with JYP Entertainment and PH Tech

The main advantage of trading using opposite JYP Entertainment and PH Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, PH Tech 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 PH Tech will offset losses from the drop in PH Tech's long position.
The idea behind JYP Entertainment Corp and PH Tech Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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