Correlation Between JYP Entertainment and Seoul Broadcasting
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Seoul Broadcasting 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 Seoul Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JYP Entertainment and Seoul Broadcasting System, you can compare the effects of market volatilities on JYP Entertainment and Seoul Broadcasting 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 Seoul Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Seoul Broadcasting.
Diversification Opportunities for JYP Entertainment and Seoul Broadcasting
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between JYP and Seoul is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and Seoul Broadcasting System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Broadcasting System 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 Seoul Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Broadcasting System has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Seoul Broadcasting go up and down completely randomly.
Pair Corralation between JYP Entertainment and Seoul Broadcasting
Assuming the 90 days trading horizon JYP Entertainment is expected to generate 1.15 times more return on investment than Seoul Broadcasting. However, JYP Entertainment is 1.15 times more volatile than Seoul Broadcasting System. It trades about -0.04 of its potential returns per unit of risk. Seoul Broadcasting System is currently generating about -0.06 per unit of risk. If you would invest 10,998,600 in JYP Entertainment on September 12, 2024 and sell it today you would lose (3,898,600) from holding JYP Entertainment or give up 35.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JYP Entertainment vs. Seoul Broadcasting System
Performance |
| Timeline |
| JYP Entertainment |
| Seoul Broadcasting System |
JYP Entertainment and Seoul Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and Seoul Broadcasting
The main advantage of trading using opposite JYP Entertainment and Seoul Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Seoul Broadcasting 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 Seoul Broadcasting will offset losses from the drop in Seoul Broadcasting's long position.| JYP Entertainment vs. YG Entertainment | JYP Entertainment vs. SM Entertainment Co | JYP Entertainment vs. Cube Entertainment |
| Seoul Broadcasting vs. YG Entertainment | Seoul Broadcasting vs. JYP Entertainment | Seoul Broadcasting vs. Cube Entertainment | Seoul Broadcasting vs. FNC Entertainment Co |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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