Correlation Between SM Entertainment and Daedong Metals
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and Daedong Metals 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 Daedong Metals 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 Daedong Metals Co, you can compare the effects of market volatilities on SM Entertainment and Daedong Metals 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 Daedong Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and Daedong Metals.
Diversification Opportunities for SM Entertainment and Daedong Metals
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 041510 and Daedong is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and Daedong Metals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Metals 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 Daedong Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Metals has no effect on the direction of SM Entertainment i.e., SM Entertainment and Daedong Metals go up and down completely randomly.
Pair Corralation between SM Entertainment and Daedong Metals
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 0.93 times more return on investment than Daedong Metals. However, SM Entertainment Co is 1.08 times less risky than Daedong Metals. It trades about 0.02 of its potential returns per unit of risk. Daedong Metals Co is currently generating about 0.0 per unit of risk. If you would invest 7,666,858 in SM Entertainment Co on September 3, 2024 and sell it today you would earn a total of 813,142 from holding SM Entertainment Co or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. Daedong Metals Co
Performance |
| Timeline |
| SM Entertainment |
| Daedong Metals |
SM Entertainment and Daedong Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and Daedong Metals
The main advantage of trading using opposite SM Entertainment and Daedong Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, Daedong Metals 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 Daedong Metals will offset losses from the drop in Daedong Metals' long position.| SM Entertainment vs. Korea New Network | SM Entertainment vs. ICD Co | SM Entertainment vs. DYPNF CoLtd | SM Entertainment vs. Busan Industrial Co |
| Daedong Metals vs. Ecocab Co | Daedong Metals vs. Daedong Gear Co | Daedong Metals vs. Hwashin Precision Engineering | Daedong Metals vs. YOUNGHWA TECH 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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