Correlation Between SM Entertainment and Hyundai Home
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and Hyundai Home 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 Hyundai Home 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 Hyundai Home Shopping, you can compare the effects of market volatilities on SM Entertainment and Hyundai Home 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 Hyundai Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and Hyundai Home.
Diversification Opportunities for SM Entertainment and Hyundai Home
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 041510 and Hyundai is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and Hyundai Home Shopping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Home Shopping 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 Hyundai Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Home Shopping has no effect on the direction of SM Entertainment i.e., SM Entertainment and Hyundai Home go up and down completely randomly.
Pair Corralation between SM Entertainment and Hyundai Home
Assuming the 90 days trading horizon SM Entertainment Co is expected to under-perform the Hyundai Home. In addition to that, SM Entertainment is 1.76 times more volatile than Hyundai Home Shopping. It trades about -0.1 of its total potential returns per unit of risk. Hyundai Home Shopping is currently generating about 0.18 per unit of volatility. If you would invest 4,370,000 in Hyundai Home Shopping on September 25, 2024 and sell it today you would earn a total of 275,000 from holding Hyundai Home Shopping or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
SM Entertainment Co vs. Hyundai Home Shopping
Performance |
| Timeline |
| SM Entertainment |
| Hyundai Home Shopping |
SM Entertainment and Hyundai Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and Hyundai Home
The main advantage of trading using opposite SM Entertainment and Hyundai Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, Hyundai Home 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 Hyundai Home will offset losses from the drop in Hyundai Home's long position.| SM Entertainment vs. Samsung Electronics Co | SM Entertainment vs. Samsung Electronics Co | SM Entertainment vs. KB Financial Group | SM Entertainment vs. Shinhan Financial Group |
| Hyundai Home vs. ITM Semiconductor Co | Hyundai Home vs. Shinsegae Food | Hyundai Home vs. Alton Sports CoLtd | Hyundai Home vs. Digital Multimedia Technology |
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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