Correlation Between SM Entertainment and Shinsegae Information
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and Shinsegae Information 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 Shinsegae Information 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 Shinsegae Information Communication, you can compare the effects of market volatilities on SM Entertainment and Shinsegae Information 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 Shinsegae Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and Shinsegae Information.
Diversification Opportunities for SM Entertainment and Shinsegae Information
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 041510 and Shinsegae is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and Shinsegae Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Information 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 Shinsegae Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Information has no effect on the direction of SM Entertainment i.e., SM Entertainment and Shinsegae Information go up and down completely randomly.
Pair Corralation between SM Entertainment and Shinsegae Information
Assuming the 90 days trading horizon SM Entertainment is expected to generate 2.53 times less return on investment than Shinsegae Information. In addition to that, SM Entertainment is 1.26 times more volatile than Shinsegae Information Communication. It trades about 0.01 of its total potential returns per unit of risk. Shinsegae Information Communication is currently generating about 0.03 per unit of volatility. If you would invest 1,356,024 in Shinsegae Information Communication on October 13, 2024 and sell it today you would earn a total of 314,976 from holding Shinsegae Information Communication or generate 23.23% 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. Shinsegae Information Communic
Performance |
| Timeline |
| SM Entertainment |
| Shinsegae Information |
SM Entertainment and Shinsegae Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and Shinsegae Information
The main advantage of trading using opposite SM Entertainment and Shinsegae Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, Shinsegae Information 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 Shinsegae Information will offset losses from the drop in Shinsegae Information's long position.| SM Entertainment vs. YG Entertainment | SM Entertainment vs. JYP Entertainment | SM Entertainment vs. Cube Entertainment | SM Entertainment vs. FNC Entertainment Co |
| Shinsegae Information vs. Pan Entertainment Co | Shinsegae Information vs. Barunson Entertainment Arts | Shinsegae Information vs. SKONEC Entertainment Co | Shinsegae Information 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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