Correlation Between Nasmedia and Next Entertainment
Can any of the company-specific risk be diversified away by investing in both Nasmedia 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 Nasmedia and Next Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasmedia Co and Next Entertainment World, you can compare the effects of market volatilities on Nasmedia 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 Nasmedia with a short position of Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasmedia and Next Entertainment.
Diversification Opportunities for Nasmedia and Next Entertainment
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasmedia and Next is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia 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 Nasmedia 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 Nasmedia 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 Nasmedia i.e., Nasmedia and Next Entertainment go up and down completely randomly.
Pair Corralation between Nasmedia and Next Entertainment
Assuming the 90 days trading horizon Nasmedia Co is expected to under-perform the Next Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Nasmedia Co is 2.13 times less risky than Next Entertainment. The stock trades about -0.26 of its potential returns per unit of risk. The Next Entertainment World is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 237,500 in Next Entertainment World on August 25, 2024 and sell it today you would lose (11,000) from holding Next Entertainment World or give up 4.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasmedia Co vs. Next Entertainment World
Performance |
| Timeline |
| Nasmedia |
| Next Entertainment World |
Nasmedia and Next Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasmedia and Next Entertainment
The main advantage of trading using opposite Nasmedia and Next Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasmedia 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.| Nasmedia vs. Busan Industrial Co | Nasmedia vs. Samlip General Foods | Nasmedia vs. Shinsegae Food | Nasmedia vs. CJ Seafood Corp |
| Next Entertainment vs. Daou Data Corp | Next Entertainment vs. Wireless Power Amplifier | Next Entertainment vs. Tway Air Co | Next Entertainment vs. Korean Air Lines |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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