Correlation Between ChipsMedia and Next Entertainment
Can any of the company-specific risk be diversified away by investing in both ChipsMedia 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 ChipsMedia and Next Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChipsMedia and Next Entertainment World, you can compare the effects of market volatilities on ChipsMedia 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 ChipsMedia with a short position of Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChipsMedia and Next Entertainment.
Diversification Opportunities for ChipsMedia and Next Entertainment
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ChipsMedia and Next is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ChipsMedia 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 ChipsMedia 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 ChipsMedia 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 ChipsMedia i.e., ChipsMedia and Next Entertainment go up and down completely randomly.
Pair Corralation between ChipsMedia and Next Entertainment
Assuming the 90 days trading horizon ChipsMedia is expected to generate 1.03 times more return on investment than Next Entertainment. However, ChipsMedia is 1.03 times more volatile than Next Entertainment World. It trades about 0.01 of its potential returns per unit of risk. Next Entertainment World is currently generating about -0.03 per unit of risk. If you would invest 1,487,000 in ChipsMedia on August 29, 2024 and sell it today you would lose (24,000) from holding ChipsMedia or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChipsMedia vs. Next Entertainment World
Performance |
| Timeline |
| ChipsMedia |
| Next Entertainment World |
ChipsMedia and Next Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChipsMedia and Next Entertainment
The main advantage of trading using opposite ChipsMedia and Next Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChipsMedia 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.| ChipsMedia vs. Daou Data Corp | ChipsMedia vs. Busan Industrial Co | ChipsMedia vs. Busan Ind | ChipsMedia vs. Shinhan WTI Futures |
| Next Entertainment vs. Korea New Network | Next Entertainment vs. Busan Industrial Co | Next Entertainment vs. Busan Ind | Next Entertainment vs. Shinhan WTI Futures |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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