Correlation Between SM Entertainment and DONGKUK TED
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and DONGKUK TED 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 DONGKUK TED 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 DONGKUK TED METAL, you can compare the effects of market volatilities on SM Entertainment and DONGKUK TED 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 DONGKUK TED. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and DONGKUK TED.
Diversification Opportunities for SM Entertainment and DONGKUK TED
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 041510 and DONGKUK is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and DONGKUK TED METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGKUK TED METAL 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 DONGKUK TED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGKUK TED METAL has no effect on the direction of SM Entertainment i.e., SM Entertainment and DONGKUK TED go up and down completely randomly.
Pair Corralation between SM Entertainment and DONGKUK TED
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 1.27 times more return on investment than DONGKUK TED. However, SM Entertainment is 1.27 times more volatile than DONGKUK TED METAL. It trades about 0.02 of its potential returns per unit of risk. DONGKUK TED METAL is currently generating about -0.1 per unit of risk. If you would invest 7,666,858 in SM Entertainment Co on September 3, 2024 and sell it today you would earn a total of 813,142 from holding SM Entertainment Co or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.49% |
| Values | Daily Returns |
SM Entertainment Co vs. DONGKUK TED METAL
Performance |
| Timeline |
| SM Entertainment |
| DONGKUK TED METAL |
SM Entertainment and DONGKUK TED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Entertainment and DONGKUK TED
The main advantage of trading using opposite SM Entertainment and DONGKUK TED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, DONGKUK TED 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 DONGKUK TED will offset losses from the drop in DONGKUK TED's long position.| SM Entertainment vs. Korea New Network | SM Entertainment vs. ICD Co | SM Entertainment vs. DYPNF CoLtd | SM Entertainment vs. Busan Industrial Co |
| DONGKUK TED vs. Samsung Electronics Co | DONGKUK TED vs. Samsung Electronics Co | DONGKUK TED vs. LG Energy Solution | DONGKUK TED vs. SK Hynix |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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