Correlation Between SM Entertainment and Samil CoLtd
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and Samil CoLtd 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 Samil CoLtd 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 Samil CoLtd, you can compare the effects of market volatilities on SM Entertainment and Samil CoLtd 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 Samil CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and Samil CoLtd.
Diversification Opportunities for SM Entertainment and Samil CoLtd
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between 041510 and Samil is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and Samil CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samil CoLtd 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 Samil CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samil CoLtd has no effect on the direction of SM Entertainment i.e., SM Entertainment and Samil CoLtd go up and down completely randomly.
Pair Corralation between SM Entertainment and Samil CoLtd
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 2.19 times more return on investment than Samil CoLtd. However, SM Entertainment is 2.19 times more volatile than Samil CoLtd. It trades about 0.02 of its potential returns per unit of risk. Samil CoLtd is currently generating about -0.02 per unit of risk. If you would invest 7,716,045 in SM Entertainment Co on September 2, 2024 and sell it today you would earn a total of 763,955 from holding SM Entertainment Co or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. Samil CoLtd
Performance |
| Timeline |
| SM Entertainment |
| Samil CoLtd |
SM Entertainment and Samil CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and Samil CoLtd
The main advantage of trading using opposite SM Entertainment and Samil CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, Samil CoLtd 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 Samil CoLtd will offset losses from the drop in Samil CoLtd's long position.| SM Entertainment vs. AfreecaTV Co | SM Entertainment vs. Seegene | SM Entertainment vs. SS TECH | SM Entertainment vs. Busan Industrial Co |
| Samil CoLtd vs. Daedong Metals Co | Samil CoLtd vs. MetaLabs Co | Samil CoLtd vs. Hanjoo Light Metal | Samil CoLtd vs. SM 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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