Correlation Between SM Entertainment and ABCO Electronics
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and ABCO Electronics 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 ABCO Electronics 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 ABCO Electronics Co, you can compare the effects of market volatilities on SM Entertainment and ABCO Electronics 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 ABCO Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and ABCO Electronics.
Diversification Opportunities for SM Entertainment and ABCO Electronics
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 041510 and ABCO is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and ABCO Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Electronics 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 ABCO Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Electronics has no effect on the direction of SM Entertainment i.e., SM Entertainment and ABCO Electronics go up and down completely randomly.
Pair Corralation between SM Entertainment and ABCO Electronics
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 0.93 times more return on investment than ABCO Electronics. However, SM Entertainment Co is 1.07 times less risky than ABCO Electronics. It trades about 0.01 of its potential returns per unit of risk. ABCO Electronics Co is currently generating about -0.14 per unit of risk. If you would invest 8,525,310 in SM Entertainment Co on September 4, 2024 and sell it today you would lose (65,310) from holding SM Entertainment Co or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. ABCO Electronics Co
Performance |
| Timeline |
| SM Entertainment |
| ABCO Electronics |
SM Entertainment and ABCO Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and ABCO Electronics
The main advantage of trading using opposite SM Entertainment and ABCO Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, ABCO Electronics 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 ABCO Electronics will offset losses from the drop in ABCO Electronics' long position.| SM Entertainment vs. Korea New Network | SM Entertainment vs. ICD Co | SM Entertainment vs. DYPNF CoLtd | SM Entertainment vs. Busan Industrial Co |
| ABCO Electronics vs. Dongsin Engineering Construction | ABCO Electronics vs. Doosan Fuel Cell | ABCO Electronics vs. Daishin Balance 1 | ABCO Electronics vs. Total Soft 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |