Correlation Between JYP Entertainment and Cenit
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Cenit 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 Cenit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JYP Entertainment and Cenit Co, you can compare the effects of market volatilities on JYP Entertainment and Cenit 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 Cenit. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Cenit.
Diversification Opportunities for JYP Entertainment and Cenit
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between JYP and Cenit is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and Cenit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenit 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 Cenit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenit has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Cenit go up and down completely randomly.
Pair Corralation between JYP Entertainment and Cenit
Assuming the 90 days trading horizon JYP Entertainment is expected to generate 4.57 times more return on investment than Cenit. However, JYP Entertainment is 4.57 times more volatile than Cenit Co. It trades about 0.22 of its potential returns per unit of risk. Cenit Co is currently generating about 0.25 per unit of risk. If you would invest 6,760,000 in JYP Entertainment on November 2, 2024 and sell it today you would earn a total of 740,000 from holding JYP Entertainment or generate 10.95% 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. Cenit Co
Performance |
| Timeline |
| JYP Entertainment |
| Cenit |
JYP Entertainment and Cenit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and Cenit
The main advantage of trading using opposite JYP Entertainment and Cenit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Cenit 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 Cenit will offset losses from the drop in Cenit's long position.| JYP Entertainment vs. YG Entertainment | JYP Entertainment vs. SM Entertainment Co | JYP Entertainment vs. Cube Entertainment |
| Cenit vs. LG Chemicals | Cenit vs. POSCO Holdings | Cenit vs. Hanwha Solutions | Cenit vs. Lotte Chemical Corp |
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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