Correlation Between AfreecaTV and Next Entertainment
Can any of the company-specific risk be diversified away by investing in both AfreecaTV 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 AfreecaTV and Next Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfreecaTV Co and Next Entertainment World, you can compare the effects of market volatilities on AfreecaTV 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 AfreecaTV with a short position of Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfreecaTV and Next Entertainment.
Diversification Opportunities for AfreecaTV and Next Entertainment
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AfreecaTV and Next is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding AfreecaTV 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 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 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 AfreecaTV i.e., AfreecaTV and Next Entertainment go up and down completely randomly.
Pair Corralation between AfreecaTV and Next Entertainment
Assuming the 90 days trading horizon AfreecaTV Co is expected to generate 1.22 times more return on investment than Next Entertainment. However, AfreecaTV is 1.22 times more volatile than Next Entertainment World. It trades about 0.04 of its potential returns per unit of risk. Next Entertainment World is currently generating about -0.08 per unit of risk. If you would invest 7,889,651 in AfreecaTV Co on September 1, 2024 and sell it today you would earn a total of 3,140,349 from holding AfreecaTV Co or generate 39.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AfreecaTV Co vs. Next Entertainment World
Performance |
| Timeline |
| AfreecaTV |
| Next Entertainment World |
AfreecaTV and Next Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfreecaTV and Next Entertainment
The main advantage of trading using opposite AfreecaTV and Next Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfreecaTV 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.The idea behind AfreecaTV Co and Next Entertainment World 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.| Next Entertainment vs. AfreecaTV Co | Next Entertainment vs. Seegene | Next Entertainment vs. SS TECH | Next Entertainment vs. Busan Industrial Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |