Correlation Between YG Entertainment and Rainbow Robotics
Can any of the company-specific risk be diversified away by investing in both YG Entertainment and Rainbow Robotics 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 YG Entertainment and Rainbow Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YG Entertainment and Rainbow Robotics, you can compare the effects of market volatilities on YG Entertainment and Rainbow Robotics 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 YG Entertainment with a short position of Rainbow Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of YG Entertainment and Rainbow Robotics.
Diversification Opportunities for YG Entertainment and Rainbow Robotics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 122870 and Rainbow is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding YG Entertainment and Rainbow Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainbow Robotics and YG Entertainment 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 YG Entertainment are associated (or correlated) with Rainbow Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainbow Robotics has no effect on the direction of YG Entertainment i.e., YG Entertainment and Rainbow Robotics go up and down completely randomly.
Pair Corralation between YG Entertainment and Rainbow Robotics
Assuming the 90 days trading horizon YG Entertainment is expected to generate 1.08 times less return on investment than Rainbow Robotics. But when comparing it to its historical volatility, YG Entertainment is 1.25 times less risky than Rainbow Robotics. It trades about 0.32 of its potential returns per unit of risk. Rainbow Robotics is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 12,500,000 in Rainbow Robotics on August 30, 2024 and sell it today you would earn a total of 2,800,000 from holding Rainbow Robotics or generate 22.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YG Entertainment vs. Rainbow Robotics
Performance |
| Timeline |
| YG Entertainment |
| Rainbow Robotics |
YG Entertainment and Rainbow Robotics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YG Entertainment and Rainbow Robotics
The main advantage of trading using opposite YG Entertainment and Rainbow Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YG Entertainment position performs unexpectedly, Rainbow Robotics 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 Rainbow Robotics will offset losses from the drop in Rainbow Robotics' long position.| YG Entertainment vs. Samsung Electronics Co | YG Entertainment vs. Samsung Electronics Co | YG Entertainment vs. LG Energy Solution | YG Entertainment vs. SK Hynix |
| Rainbow Robotics vs. Songwon Industrial Co | Rainbow Robotics vs. Green Cross Medical | Rainbow Robotics vs. Myoung Shin Industrial | Rainbow Robotics vs. Seoyon Topmetal 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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