Correlation Between SM Entertainment and MEDIANA CoLtd
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and MEDIANA 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 MEDIANA 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 MEDIANA CoLtd, you can compare the effects of market volatilities on SM Entertainment and MEDIANA 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 MEDIANA CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and MEDIANA CoLtd.
Diversification Opportunities for SM Entertainment and MEDIANA CoLtd
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 041510 and MEDIANA is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and MEDIANA CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIANA 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 MEDIANA CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIANA CoLtd has no effect on the direction of SM Entertainment i.e., SM Entertainment and MEDIANA CoLtd go up and down completely randomly.
Pair Corralation between SM Entertainment and MEDIANA CoLtd
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 0.77 times more return on investment than MEDIANA CoLtd. However, SM Entertainment Co is 1.29 times less risky than MEDIANA CoLtd. It trades about 0.3 of its potential returns per unit of risk. MEDIANA CoLtd is currently generating about 0.08 per unit of risk. If you would invest 7,080,000 in SM Entertainment Co on August 30, 2024 and sell it today you would earn a total of 1,570,000 from holding SM Entertainment Co or generate 22.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. MEDIANA CoLtd
Performance |
| Timeline |
| SM Entertainment |
| MEDIANA CoLtd |
SM Entertainment and MEDIANA CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and MEDIANA CoLtd
The main advantage of trading using opposite SM Entertainment and MEDIANA CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, MEDIANA 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 MEDIANA CoLtd will offset losses from the drop in MEDIANA CoLtd's long position.| SM Entertainment vs. Korea New Network | SM Entertainment vs. Busan Industrial Co | SM Entertainment vs. Busan Ind | SM Entertainment vs. Shinhan WTI Futures |
| MEDIANA CoLtd vs. Samsung Electronics Co | MEDIANA CoLtd vs. Samsung Electronics Co | MEDIANA CoLtd vs. LG Energy Solution | MEDIANA CoLtd vs. SK Hynix |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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