Correlation Between Sejong Telecom and YG Entertainment
Can any of the company-specific risk be diversified away by investing in both Sejong Telecom and YG 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 Sejong Telecom and YG Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sejong Telecom and YG Entertainment, you can compare the effects of market volatilities on Sejong Telecom and YG 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 Sejong Telecom with a short position of YG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejong Telecom and YG Entertainment.
Diversification Opportunities for Sejong Telecom and YG Entertainment
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sejong and 122870 is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sejong Telecom and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment and Sejong Telecom 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 Sejong Telecom are associated (or correlated) with YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of Sejong Telecom i.e., Sejong Telecom and YG Entertainment go up and down completely randomly.
Pair Corralation between Sejong Telecom and YG Entertainment
Assuming the 90 days trading horizon Sejong Telecom is expected to under-perform the YG Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Sejong Telecom is 1.58 times less risky than YG Entertainment. The stock trades about -0.4 of its potential returns per unit of risk. The YG Entertainment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,330,000 in YG Entertainment on September 12, 2024 and sell it today you would earn a total of 165,000 from holding YG Entertainment or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sejong Telecom vs. YG Entertainment
Performance |
| Timeline |
| Sejong Telecom |
| YG Entertainment |
Sejong Telecom and YG Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejong Telecom and YG Entertainment
The main advantage of trading using opposite Sejong Telecom and YG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejong Telecom position performs unexpectedly, YG 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 YG Entertainment will offset losses from the drop in YG Entertainment's long position.| Sejong Telecom vs. YG Entertainment | Sejong Telecom vs. JYP Entertainment | Sejong Telecom vs. Cube Entertainment | Sejong Telecom vs. FNC Entertainment Co |
| YG Entertainment vs. JYP Entertainment | YG Entertainment vs. SM Entertainment Co | YG Entertainment vs. Cube Entertainment | YG Entertainment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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