Correlation Between JYP Entertainment and Naver
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Naver 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 Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JYP Entertainment and Naver, you can compare the effects of market volatilities on JYP Entertainment and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Naver.
Diversification Opportunities for JYP Entertainment and Naver
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JYP and Naver is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Naver go up and down completely randomly.
Pair Corralation between JYP Entertainment and Naver
Assuming the 90 days trading horizon JYP Entertainment is expected to under-perform the Naver. In addition to that, JYP Entertainment is 1.41 times more volatile than Naver. It trades about -0.02 of its total potential returns per unit of risk. Naver is currently generating about 0.01 per unit of volatility. If you would invest 20,250,000 in Naver on September 14, 2024 and sell it today you would earn a total of 550,000 from holding Naver or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
JYP Entertainment vs. Naver
Performance |
| Timeline |
| JYP Entertainment |
| Naver |
JYP Entertainment and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and Naver
The main advantage of trading using opposite JYP Entertainment and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| JYP Entertainment vs. YG Entertainment | JYP Entertainment vs. Cube Entertainment | JYP Entertainment vs. FNC Entertainment Co |
| Naver vs. YG Entertainment | Naver vs. JYP Entertainment | Naver vs. Cube Entertainment | Naver 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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