Correlation Between SM Entertainment and Samick Musical
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and Samick Musical 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 SM Entertainment and Samick Musical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Entertainment Co and Samick Musical Instruments, you can compare the effects of market volatilities on SM Entertainment and Samick Musical 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 SM Entertainment with a short position of Samick Musical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and Samick Musical.
Diversification Opportunities for SM Entertainment and Samick Musical
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 041510 and Samick is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and Samick Musical Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samick Musical Instr and SM 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 SM Entertainment Co are associated (or correlated) with Samick Musical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samick Musical Instr has no effect on the direction of SM Entertainment i.e., SM Entertainment and Samick Musical go up and down completely randomly.
Pair Corralation between SM Entertainment and Samick Musical
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 0.72 times more return on investment than Samick Musical. However, SM Entertainment Co is 1.4 times less risky than Samick Musical. It trades about 0.34 of its potential returns per unit of risk. Samick Musical Instruments is currently generating about -0.19 per unit of risk. If you would invest 8,350,000 in SM Entertainment Co on December 1, 2024 and sell it today you would earn a total of 1,690,000 from holding SM Entertainment Co or generate 20.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. Samick Musical Instruments
Performance |
| Timeline |
| SM Entertainment |
| Samick Musical Instr |
SM Entertainment and Samick Musical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and Samick Musical
The main advantage of trading using opposite SM Entertainment and Samick Musical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, Samick Musical 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 Samick Musical will offset losses from the drop in Samick Musical's long position.| SM Entertainment vs. YG Entertainment | SM Entertainment vs. JYP Entertainment | SM Entertainment vs. Cube Entertainment | SM Entertainment vs. FNC Entertainment Co |
| Samick Musical vs. Namhae Chemical | Samick Musical vs. Kumho Petro Chemical | Samick Musical vs. INFINITT Healthcare Co | Samick Musical vs. Hannong Chemicals |
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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