Correlation Between SM Entertainment and GeneBioTech
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and GeneBioTech 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 GeneBioTech 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 GeneBioTech Co, you can compare the effects of market volatilities on SM Entertainment and GeneBioTech 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 GeneBioTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and GeneBioTech.
Diversification Opportunities for SM Entertainment and GeneBioTech
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 041510 and GeneBioTech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and GeneBioTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneBioTech 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 GeneBioTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneBioTech has no effect on the direction of SM Entertainment i.e., SM Entertainment and GeneBioTech go up and down completely randomly.
Pair Corralation between SM Entertainment and GeneBioTech
Assuming the 90 days trading horizon SM Entertainment Co is expected to under-perform the GeneBioTech. In addition to that, SM Entertainment is 1.24 times more volatile than GeneBioTech Co. It trades about -0.12 of its total potential returns per unit of risk. GeneBioTech Co is currently generating about -0.06 per unit of volatility. If you would invest 344,000 in GeneBioTech Co on September 26, 2024 and sell it today you would lose (12,500) from holding GeneBioTech Co or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. GeneBioTech Co
Performance |
| Timeline |
| SM Entertainment |
| GeneBioTech |
SM Entertainment and GeneBioTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and GeneBioTech
The main advantage of trading using opposite SM Entertainment and GeneBioTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, GeneBioTech 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 GeneBioTech will offset losses from the drop in GeneBioTech'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 |
| GeneBioTech vs. A Tech Solution Co | GeneBioTech vs. SS TECH | GeneBioTech vs. PJ Metal Co | GeneBioTech vs. Duksan Hi Metal |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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