Correlation Between JYP Entertainment and KPX Chemical
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and KPX Chemical 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 KPX Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JYP Entertainment and KPX Chemical, you can compare the effects of market volatilities on JYP Entertainment and KPX Chemical 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 KPX Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and KPX Chemical.
Diversification Opportunities for JYP Entertainment and KPX Chemical
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JYP and KPX is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and KPX Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Chemical 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 are associated (or correlated) with KPX Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Chemical has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and KPX Chemical go up and down completely randomly.
Pair Corralation between JYP Entertainment and KPX Chemical
Assuming the 90 days trading horizon JYP Entertainment is expected to generate 3.05 times more return on investment than KPX Chemical. However, JYP Entertainment is 3.05 times more volatile than KPX Chemical. It trades about 0.15 of its potential returns per unit of risk. KPX Chemical is currently generating about -0.12 per unit of risk. If you would invest 4,954,274 in JYP Entertainment on November 2, 2024 and sell it today you would earn a total of 2,545,726 from holding JYP Entertainment or generate 51.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JYP Entertainment vs. KPX Chemical
Performance |
| Timeline |
| JYP Entertainment |
| KPX Chemical |
JYP Entertainment and KPX Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and KPX Chemical
The main advantage of trading using opposite JYP Entertainment and KPX Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, KPX Chemical 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 KPX Chemical will offset losses from the drop in KPX Chemical's long position.| JYP Entertainment vs. YG Entertainment | JYP Entertainment vs. SM Entertainment Co | JYP Entertainment vs. Cube Entertainment |
| KPX Chemical vs. Sangsin Energy Display | KPX Chemical vs. GS Retail Co | KPX Chemical vs. Korea Air Svc | KPX Chemical vs. Mobileleader 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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