Correlation Between SM Entertainment and Leaders Technology
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and Leaders Technology 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 Leaders Technology 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 Leaders Technology Investment, you can compare the effects of market volatilities on SM Entertainment and Leaders Technology 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 Leaders Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and Leaders Technology.
Diversification Opportunities for SM Entertainment and Leaders Technology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 041510 and Leaders is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and Leaders Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaders Technology 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 Leaders Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaders Technology has no effect on the direction of SM Entertainment i.e., SM Entertainment and Leaders Technology go up and down completely randomly.
Pair Corralation between SM Entertainment and Leaders Technology
Assuming the 90 days trading horizon SM Entertainment Co is expected to under-perform the Leaders Technology. But the stock apears to be less risky and, when comparing its historical volatility, SM Entertainment Co is 1.65 times less risky than Leaders Technology. The stock trades about -0.34 of its potential returns per unit of risk. The Leaders Technology Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 29,900 in Leaders Technology Investment on October 14, 2024 and sell it today you would earn a total of 400.00 from holding Leaders Technology Investment or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. Leaders Technology Investment
Performance |
| Timeline |
| SM Entertainment |
| Leaders Technology |
SM Entertainment and Leaders Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and Leaders Technology
The main advantage of trading using opposite SM Entertainment and Leaders Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, Leaders Technology 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 Leaders Technology will offset losses from the drop in Leaders Technology's long position.| SM Entertainment vs. YG Entertainment | SM Entertainment vs. JYP Entertainment | SM Entertainment vs. Cube Entertainment | SM Entertainment vs. FNC Entertainment Co |
| Leaders Technology vs. Dongbu Insurance Co | Leaders Technology vs. Sam Yang Foods | Leaders Technology vs. Hanjin Transportation Co | Leaders Technology vs. Industrial Bank |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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