Correlation Between Daewon Media and Nasmedia
Can any of the company-specific risk be diversified away by investing in both Daewon Media and Nasmedia 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 Daewon Media and Nasmedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewon Media Co and Nasmedia Co, you can compare the effects of market volatilities on Daewon Media and Nasmedia 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 Daewon Media with a short position of Nasmedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewon Media and Nasmedia.
Diversification Opportunities for Daewon Media and Nasmedia
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewon and Nasmedia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Daewon Media Co and Nasmedia Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasmedia and Daewon Media 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 Daewon Media Co are associated (or correlated) with Nasmedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasmedia has no effect on the direction of Daewon Media i.e., Daewon Media and Nasmedia go up and down completely randomly.
Pair Corralation between Daewon Media and Nasmedia
Assuming the 90 days trading horizon Daewon Media Co is expected to under-perform the Nasmedia. But the stock apears to be less risky and, when comparing its historical volatility, Daewon Media Co is 1.18 times less risky than Nasmedia. The stock trades about -0.34 of its potential returns per unit of risk. The Nasmedia Co is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 1,597,000 in Nasmedia Co on August 28, 2024 and sell it today you would lose (141,000) from holding Nasmedia Co or give up 8.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewon Media Co vs. Nasmedia Co
Performance |
| Timeline |
| Daewon Media |
| Nasmedia |
Daewon Media and Nasmedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewon Media and Nasmedia
The main advantage of trading using opposite Daewon Media and Nasmedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewon Media position performs unexpectedly, Nasmedia 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 Nasmedia will offset losses from the drop in Nasmedia's long position.| Daewon Media vs. HJ ShipBuilding Construction | Daewon Media vs. Golden Bridge Investment | Daewon Media vs. Daewoo Engineering Construction | Daewon Media vs. Korea Investment Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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