Correlation Between SM Entertainment and Carriesoft
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and Carriesoft 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 Carriesoft 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 Carriesoft Co, you can compare the effects of market volatilities on SM Entertainment and Carriesoft 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 Carriesoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and Carriesoft.
Diversification Opportunities for SM Entertainment and Carriesoft
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 041510 and Carriesoft is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and Carriesoft Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carriesoft 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 Carriesoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carriesoft has no effect on the direction of SM Entertainment i.e., SM Entertainment and Carriesoft go up and down completely randomly.
Pair Corralation between SM Entertainment and Carriesoft
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 0.9 times more return on investment than Carriesoft. However, SM Entertainment Co is 1.11 times less risky than Carriesoft. It trades about 0.01 of its potential returns per unit of risk. Carriesoft Co is currently generating about -0.04 per unit of risk. If you would invest 9,719,248 in SM Entertainment Co on September 1, 2024 and sell it today you would lose (1,239,248) from holding SM Entertainment Co or give up 12.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Entertainment Co vs. Carriesoft Co
Performance |
| Timeline |
| SM Entertainment |
| Carriesoft |
SM Entertainment and Carriesoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and Carriesoft
The main advantage of trading using opposite SM Entertainment and Carriesoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, Carriesoft 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 Carriesoft will offset losses from the drop in Carriesoft's long position.| SM Entertainment vs. YG Entertainment | SM Entertainment vs. JYP Entertainment | SM Entertainment vs. Cube Entertainment | SM Entertainment vs. FNC Entertainment Co |
| Carriesoft vs. DONGKUK TED METAL | Carriesoft vs. Seoam Machinery Industry | Carriesoft vs. Tuksu Engineering ConstructionLtd | Carriesoft vs. Shinsegae Engineering Construction |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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