Correlation Between SM Entertainment and Daewon Media
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and Daewon Media 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 Daewon Media 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 Daewon Media Co, you can compare the effects of market volatilities on SM Entertainment and Daewon Media 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 Daewon Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and Daewon Media.
Diversification Opportunities for SM Entertainment and Daewon Media
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 041510 and Daewon is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and Daewon Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Media 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 Daewon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Media has no effect on the direction of SM Entertainment i.e., SM Entertainment and Daewon Media go up and down completely randomly.
Pair Corralation between SM Entertainment and Daewon Media
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 2.32 times more return on investment than Daewon Media. However, SM Entertainment is 2.32 times more volatile than Daewon Media Co. It trades about 0.22 of its potential returns per unit of risk. Daewon Media Co is currently generating about -0.34 per unit of risk. If you would invest 6,780,000 in SM Entertainment Co on August 28, 2024 and sell it today you would earn a total of 1,620,000 from holding SM Entertainment Co or generate 23.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. Daewon Media Co
Performance |
| Timeline |
| SM Entertainment |
| Daewon Media |
SM Entertainment and Daewon Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and Daewon Media
The main advantage of trading using opposite SM Entertainment and Daewon Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, Daewon Media 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 Daewon Media will offset losses from the drop in Daewon Media's long position.| SM Entertainment vs. AfreecaTV Co | SM Entertainment vs. SS TECH | SM Entertainment vs. Busan Industrial Co | SM Entertainment vs. Busan Ind |
| Daewon Media vs. HJ ShipBuilding Construction | Daewon Media vs. Golden Bridge Investment | Daewon Media vs. Daewoo Engineering Construction | Daewon Media vs. Korea Investment Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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