Correlation Between JYP Entertainment and Cube Entertainment
Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and Cube Entertainment 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 Cube Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JYP Entertainment and Cube Entertainment, you can compare the effects of market volatilities on JYP Entertainment and Cube Entertainment 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 Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and Cube Entertainment.
Diversification Opportunities for JYP Entertainment and Cube Entertainment
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JYP and Cube is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment 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 Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Cube Entertainment go up and down completely randomly.
Pair Corralation between JYP Entertainment and Cube Entertainment
Assuming the 90 days trading horizon JYP Entertainment is expected to generate 1.17 times more return on investment than Cube Entertainment. However, JYP Entertainment is 1.17 times more volatile than Cube Entertainment. It trades about 0.63 of its potential returns per unit of risk. Cube Entertainment is currently generating about 0.38 per unit of risk. If you would invest 4,875,000 in JYP Entertainment on September 2, 2024 and sell it today you would earn a total of 2,765,000 from holding JYP Entertainment or generate 56.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JYP Entertainment vs. Cube Entertainment
Performance |
| Timeline |
| JYP Entertainment |
| Cube Entertainment |
JYP Entertainment and Cube Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JYP Entertainment and Cube Entertainment
The main advantage of trading using opposite JYP Entertainment and Cube Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, Cube Entertainment 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 Cube Entertainment will offset losses from the drop in Cube Entertainment's long position.| JYP Entertainment vs. YG Entertainment | JYP Entertainment vs. SM Entertainment Co | JYP Entertainment vs. Cube Entertainment |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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