Correlation Between Innowireless and FNC Entertainment
Can any of the company-specific risk be diversified away by investing in both Innowireless and FNC 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 Innowireless and FNC Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innowireless Co and FNC Entertainment Co, you can compare the effects of market volatilities on Innowireless and FNC 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 Innowireless with a short position of FNC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innowireless and FNC Entertainment.
Diversification Opportunities for Innowireless and FNC Entertainment
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Innowireless and FNC is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless Co and FNC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNC Entertainment and Innowireless 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 Innowireless Co are associated (or correlated) with FNC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNC Entertainment has no effect on the direction of Innowireless i.e., Innowireless and FNC Entertainment go up and down completely randomly.
Pair Corralation between Innowireless and FNC Entertainment
Assuming the 90 days trading horizon Innowireless Co is expected to under-perform the FNC Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Innowireless Co is 1.55 times less risky than FNC Entertainment. The stock trades about -0.09 of its potential returns per unit of risk. The FNC Entertainment Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 287,500 in FNC Entertainment Co on November 29, 2024 and sell it today you would earn a total of 24,500 from holding FNC Entertainment Co or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innowireless Co vs. FNC Entertainment Co
Performance |
| Timeline |
| Innowireless |
| FNC Entertainment |
Innowireless and FNC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innowireless and FNC Entertainment
The main advantage of trading using opposite Innowireless and FNC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innowireless position performs unexpectedly, FNC 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 FNC Entertainment will offset losses from the drop in FNC Entertainment's long position.| Innowireless vs. JYP Entertainment Corp | Innowireless vs. Sempio Foods Co | Innowireless vs. SK Chemicals Co | Innowireless vs. Digital Multimedia Technology |
| FNC Entertainment vs. Shinsegae Food | FNC Entertainment vs. LG Display Co | FNC Entertainment vs. FoodNamoo | FNC Entertainment vs. Samyang Foods 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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