Correlation Between Cafe24 Corp and YG Entertainment
Can any of the company-specific risk be diversified away by investing in both Cafe24 Corp and YG 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 Cafe24 Corp and YG Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cafe24 Corp and YG Entertainment, you can compare the effects of market volatilities on Cafe24 Corp and YG 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 Cafe24 Corp with a short position of YG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cafe24 Corp and YG Entertainment.
Diversification Opportunities for Cafe24 Corp and YG Entertainment
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cafe24 and 122870 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cafe24 Corp and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment and Cafe24 Corp 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 Cafe24 Corp are associated (or correlated) with YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of Cafe24 Corp i.e., Cafe24 Corp and YG Entertainment go up and down completely randomly.
Pair Corralation between Cafe24 Corp and YG Entertainment
Assuming the 90 days trading horizon Cafe24 Corp is expected to generate 1.71 times more return on investment than YG Entertainment. However, Cafe24 Corp is 1.71 times more volatile than YG Entertainment. It trades about 0.25 of its potential returns per unit of risk. YG Entertainment is currently generating about 0.3 per unit of risk. If you would invest 2,465,000 in Cafe24 Corp on August 29, 2024 and sell it today you would earn a total of 695,000 from holding Cafe24 Corp or generate 28.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cafe24 Corp vs. YG Entertainment
Performance |
| Timeline |
| Cafe24 Corp |
| YG Entertainment |
Cafe24 Corp and YG Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cafe24 Corp and YG Entertainment
The main advantage of trading using opposite Cafe24 Corp and YG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cafe24 Corp position performs unexpectedly, YG 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 YG Entertainment will offset losses from the drop in YG Entertainment's long position.| Cafe24 Corp vs. YG Entertainment | Cafe24 Corp vs. Daishin Information Communications | Cafe24 Corp vs. DC Media Co | Cafe24 Corp vs. MEDIANA CoLtd |
| YG Entertainment vs. Samsung Electronics Co | YG Entertainment vs. Samsung Electronics Co | YG Entertainment vs. LG Energy Solution | YG Entertainment 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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