Correlation Between Daewon Media and Next Entertainment
Can any of the company-specific risk be diversified away by investing in both Daewon Media and Next 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 Daewon Media and Next Entertainment 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 Next Entertainment World, you can compare the effects of market volatilities on Daewon Media and Next 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 Daewon Media with a short position of Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewon Media and Next Entertainment.
Diversification Opportunities for Daewon Media and Next Entertainment
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daewon and Next is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Daewon Media Co and Next Entertainment World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Entertainment World 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 Next Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Entertainment World has no effect on the direction of Daewon Media i.e., Daewon Media and Next Entertainment go up and down completely randomly.
Pair Corralation between Daewon Media and Next Entertainment
Assuming the 90 days trading horizon Daewon Media Co is expected to generate 0.6 times more return on investment than Next Entertainment. However, Daewon Media Co is 1.67 times less risky than Next Entertainment. It trades about -0.1 of its potential returns per unit of risk. Next Entertainment World is currently generating about -0.09 per unit of risk. If you would invest 1,136,362 in Daewon Media Co on August 25, 2024 and sell it today you would lose (385,362) from holding Daewon Media Co or give up 33.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewon Media Co vs. Next Entertainment World
Performance |
| Timeline |
| Daewon Media |
| Next Entertainment World |
Daewon Media and Next Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewon Media and Next Entertainment
The main advantage of trading using opposite Daewon Media and Next Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewon Media position performs unexpectedly, Next 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 Next Entertainment will offset losses from the drop in Next Entertainment's long position.| Daewon Media vs. Hankuk Steel Wire | Daewon Media vs. Korea Air Svc | Daewon Media vs. Seah Steel Corp | Daewon Media vs. Sam Yang Foods |
| Next Entertainment vs. Daou Data Corp | Next Entertainment vs. Wireless Power Amplifier | Next Entertainment vs. Tway Air Co | Next Entertainment vs. Korean Air Lines |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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