Correlation Between SM Entertainment and FNC Entertainment
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and FNC Entertainment 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 FNC Entertainment 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 FNC Entertainment Co, you can compare the effects of market volatilities on SM Entertainment and FNC Entertainment 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 FNC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and FNC Entertainment.
Diversification Opportunities for SM Entertainment and FNC Entertainment
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between 041510 and FNC is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and FNC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNC Entertainment 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 FNC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNC Entertainment has no effect on the direction of SM Entertainment i.e., SM Entertainment and FNC Entertainment go up and down completely randomly.
Pair Corralation between SM Entertainment and FNC Entertainment
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 1.02 times more return on investment than FNC Entertainment. However, SM Entertainment is 1.02 times more volatile than FNC Entertainment Co. It trades about 0.28 of its potential returns per unit of risk. FNC Entertainment Co is currently generating about -0.16 per unit of risk. If you would invest 7,010,000 in SM Entertainment Co on August 29, 2024 and sell it today you would earn a total of 1,390,000 from holding SM Entertainment Co or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. FNC Entertainment Co
Performance |
| Timeline |
| SM Entertainment |
| FNC Entertainment |
SM Entertainment and FNC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and FNC Entertainment
The main advantage of trading using opposite SM Entertainment and FNC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, FNC Entertainment 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 FNC Entertainment will offset losses from the drop in FNC Entertainment's long position.| SM Entertainment vs. AfreecaTV Co | SM Entertainment vs. SS TECH | SM Entertainment vs. Busan Industrial Co | SM Entertainment vs. Busan Ind |
| FNC Entertainment vs. AfreecaTV Co | FNC Entertainment vs. SS TECH | FNC Entertainment vs. Busan Industrial Co | FNC Entertainment vs. Busan Ind |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |