Correlation Between SM Entertainment and THiRA UTECH
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and THiRA UTECH 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 THiRA UTECH 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 THiRA UTECH LTD, you can compare the effects of market volatilities on SM Entertainment and THiRA UTECH 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 THiRA UTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and THiRA UTECH.
Diversification Opportunities for SM Entertainment and THiRA UTECH
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 041510 and THiRA is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and THiRA UTECH LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THiRA UTECH LTD 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 THiRA UTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THiRA UTECH LTD has no effect on the direction of SM Entertainment i.e., SM Entertainment and THiRA UTECH go up and down completely randomly.
Pair Corralation between SM Entertainment and THiRA UTECH
Assuming the 90 days trading horizon SM Entertainment Co is expected to under-perform the THiRA UTECH. But the stock apears to be less risky and, when comparing its historical volatility, SM Entertainment Co is 1.53 times less risky than THiRA UTECH. The stock trades about -0.06 of its potential returns per unit of risk. The THiRA UTECH LTD is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 454,000 in THiRA UTECH LTD on October 9, 2024 and sell it today you would earn a total of 73,000 from holding THiRA UTECH LTD or generate 16.08% 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. THiRA UTECH LTD
Performance |
| Timeline |
| SM Entertainment |
| THiRA UTECH LTD |
SM Entertainment and THiRA UTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and THiRA UTECH
The main advantage of trading using opposite SM Entertainment and THiRA UTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, THiRA UTECH 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 THiRA UTECH will offset losses from the drop in THiRA UTECH's long position.| SM Entertainment vs. YG Entertainment | SM Entertainment vs. JYP Entertainment | SM Entertainment vs. Cube Entertainment | SM Entertainment vs. FNC Entertainment Co |
| THiRA UTECH vs. Cheryong Industrial CoLtd | THiRA UTECH vs. Daesung Industrial Co | THiRA UTECH vs. Dongbu Insurance Co | THiRA UTECH vs. Youngsin Metal Industrial |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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