Correlation Between NewFlex Technology and SM Entertainment
Can any of the company-specific risk be diversified away by investing in both NewFlex Technology and SM 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 NewFlex Technology and SM Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewFlex Technology Co and SM Entertainment Co, you can compare the effects of market volatilities on NewFlex Technology and SM 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 NewFlex Technology with a short position of SM Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFlex Technology and SM Entertainment.
Diversification Opportunities for NewFlex Technology and SM Entertainment
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between NewFlex and 041510 is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co and SM Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Entertainment and NewFlex Technology 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 NewFlex Technology Co are associated (or correlated) with SM Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Entertainment has no effect on the direction of NewFlex Technology i.e., NewFlex Technology and SM Entertainment go up and down completely randomly.
Pair Corralation between NewFlex Technology and SM Entertainment
Assuming the 90 days trading horizon NewFlex Technology Co is expected to generate 1.51 times more return on investment than SM Entertainment. However, NewFlex Technology is 1.51 times more volatile than SM Entertainment Co. It trades about 0.0 of its potential returns per unit of risk. SM Entertainment Co is currently generating about 0.0 per unit of risk. If you would invest 667,000 in NewFlex Technology Co on August 31, 2024 and sell it today you would lose (183,000) from holding NewFlex Technology Co or give up 27.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
NewFlex Technology Co vs. SM Entertainment Co
Performance |
| Timeline |
| NewFlex Technology |
| SM Entertainment |
NewFlex Technology and SM Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewFlex Technology and SM Entertainment
The main advantage of trading using opposite NewFlex Technology and SM Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewFlex Technology position performs unexpectedly, SM 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 SM Entertainment will offset losses from the drop in SM Entertainment's long position.| NewFlex Technology vs. Dongsin Engineering Construction | NewFlex Technology vs. Doosan Fuel Cell | NewFlex Technology vs. Daishin Balance 1 | NewFlex Technology vs. Total Soft Bank |
| SM Entertainment vs. AfreecaTV Co | SM Entertainment vs. Seegene | SM Entertainment vs. SS TECH | SM 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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