Correlation Between SM Entertainment and SKONEC Entertainment
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and SKONEC 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 SKONEC 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 SKONEC Entertainment Co, you can compare the effects of market volatilities on SM Entertainment and SKONEC 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 SKONEC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and SKONEC Entertainment.
Diversification Opportunities for SM Entertainment and SKONEC Entertainment
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 041510 and SKONEC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and SKONEC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKONEC 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 SKONEC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKONEC Entertainment has no effect on the direction of SM Entertainment i.e., SM Entertainment and SKONEC Entertainment go up and down completely randomly.
Pair Corralation between SM Entertainment and SKONEC Entertainment
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 0.34 times more return on investment than SKONEC Entertainment. However, SM Entertainment Co is 2.95 times less risky than SKONEC Entertainment. It trades about 0.4 of its potential returns per unit of risk. SKONEC Entertainment Co is currently generating about -0.07 per unit of risk. If you would invest 8,350,000 in SM Entertainment Co on November 27, 2024 and sell it today you would earn a total of 1,670,000 from holding SM Entertainment Co or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. SKONEC Entertainment Co
Performance |
| Timeline |
| SM Entertainment |
| SKONEC Entertainment |
SM Entertainment and SKONEC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and SKONEC Entertainment
The main advantage of trading using opposite SM Entertainment and SKONEC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, SKONEC 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 SKONEC Entertainment will offset losses from the drop in SKONEC Entertainment's long position.| SM Entertainment vs. YG Entertainment | SM Entertainment vs. JYP Entertainment | SM Entertainment vs. Cube Entertainment | SM Entertainment vs. FNC Entertainment Co |
| SKONEC Entertainment vs. LB Investment | SKONEC Entertainment vs. Korea Investment Holdings | SKONEC Entertainment vs. Samick Musical Instruments | SKONEC Entertainment vs. Coloray International Investment |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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