Correlation Between AfreecaTV and Genie Music
Can any of the company-specific risk be diversified away by investing in both AfreecaTV and Genie Music 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 Genie Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfreecaTV Co and Genie Music, you can compare the effects of market volatilities on AfreecaTV and Genie Music 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 Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfreecaTV and Genie Music.
Diversification Opportunities for AfreecaTV and Genie Music
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AfreecaTV and Genie is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AfreecaTV Co and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music 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 Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of AfreecaTV i.e., AfreecaTV and Genie Music go up and down completely randomly.
Pair Corralation between AfreecaTV and Genie Music
Assuming the 90 days trading horizon AfreecaTV Co is expected to generate 1.25 times more return on investment than Genie Music. However, AfreecaTV is 1.25 times more volatile than Genie Music. It trades about 0.03 of its potential returns per unit of risk. Genie Music is currently generating about -0.03 per unit of risk. If you would invest 8,223,333 in AfreecaTV Co on August 27, 2024 and sell it today you would earn a total of 1,426,667 from holding AfreecaTV Co or generate 17.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AfreecaTV Co vs. Genie Music
Performance |
| Timeline |
| AfreecaTV |
| Genie Music |
AfreecaTV and Genie Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfreecaTV and Genie Music
The main advantage of trading using opposite AfreecaTV and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfreecaTV position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music's long position.The idea behind AfreecaTV Co and Genie Music pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Genie Music vs. AfreecaTV Co | Genie Music vs. SS TECH | Genie Music vs. Busan Industrial Co | Genie Music vs. Busan Ind |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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