Correlation Between AfreecaTV and Taegu Broadcasting
Can any of the company-specific risk be diversified away by investing in both AfreecaTV and Taegu Broadcasting 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 AfreecaTV and Taegu Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfreecaTV Co and Taegu Broadcasting, you can compare the effects of market volatilities on AfreecaTV and Taegu Broadcasting 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 AfreecaTV with a short position of Taegu Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfreecaTV and Taegu Broadcasting.
Diversification Opportunities for AfreecaTV and Taegu Broadcasting
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AfreecaTV and Taegu is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding AfreecaTV Co and Taegu Broadcasting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taegu Broadcasting and AfreecaTV 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 AfreecaTV Co are associated (or correlated) with Taegu Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taegu Broadcasting has no effect on the direction of AfreecaTV i.e., AfreecaTV and Taegu Broadcasting go up and down completely randomly.
Pair Corralation between AfreecaTV and Taegu Broadcasting
Assuming the 90 days trading horizon AfreecaTV Co is expected to generate 2.28 times more return on investment than Taegu Broadcasting. However, AfreecaTV is 2.28 times more volatile than Taegu Broadcasting. It trades about 0.29 of its potential returns per unit of risk. Taegu Broadcasting is currently generating about -0.06 per unit of risk. If you would invest 8,830,000 in AfreecaTV Co on August 30, 2024 and sell it today you would earn a total of 1,950,000 from holding AfreecaTV Co or generate 22.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AfreecaTV Co vs. Taegu Broadcasting
Performance |
| Timeline |
| AfreecaTV |
| Taegu Broadcasting |
AfreecaTV and Taegu Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfreecaTV and Taegu Broadcasting
The main advantage of trading using opposite AfreecaTV and Taegu Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfreecaTV position performs unexpectedly, Taegu Broadcasting 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 Taegu Broadcasting will offset losses from the drop in Taegu Broadcasting's long position.| AfreecaTV vs. Korea New Network | AfreecaTV vs. Busan Industrial Co | AfreecaTV vs. Busan Ind | AfreecaTV vs. Shinhan WTI Futures |
| Taegu Broadcasting vs. Korea New Network | Taegu Broadcasting vs. Busan Industrial Co | Taegu Broadcasting vs. Busan Ind | Taegu Broadcasting vs. Shinhan WTI Futures |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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