Correlation Between SS TECH and SM Entertainment
Can any of the company-specific risk be diversified away by investing in both SS TECH 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 SS TECH and SM Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SS TECH and SM Entertainment Co, you can compare the effects of market volatilities on SS TECH 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 SS TECH with a short position of SM Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SS TECH and SM Entertainment.
Diversification Opportunities for SS TECH and SM Entertainment
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between 101490 and 041510 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SS TECH and SM Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Entertainment and SS TECH 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 SS TECH 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 SS TECH i.e., SS TECH and SM Entertainment go up and down completely randomly.
Pair Corralation between SS TECH and SM Entertainment
Assuming the 90 days trading horizon SS TECH is expected to generate 1.06 times more return on investment than SM Entertainment. However, SS TECH is 1.06 times more volatile than SM Entertainment Co. It trades about 0.02 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 3,115,487 in SS TECH on November 19, 2024 and sell it today you would earn a total of 24,513 from holding SS TECH or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SS TECH vs. SM Entertainment Co
Performance |
| Timeline |
| SS TECH |
| SM Entertainment |
SS TECH and SM Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SS TECH and SM Entertainment
The main advantage of trading using opposite SS TECH and SM Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SS TECH 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.The idea behind SS TECH and SM Entertainment Co 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.| SM Entertainment vs. YG Entertainment | SM Entertainment vs. JYP Entertainment | SM Entertainment vs. Cube Entertainment | SM Entertainment vs. FNC Entertainment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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