Correlation Between YG Entertainment and RF Materials
Can any of the company-specific risk be diversified away by investing in both YG Entertainment and RF Materials 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 RF Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YG Entertainment and RF Materials Co, you can compare the effects of market volatilities on YG Entertainment and RF Materials 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 RF Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of YG Entertainment and RF Materials.
Diversification Opportunities for YG Entertainment and RF Materials
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 122870 and 327260 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding YG Entertainment and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Materials 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of YG Entertainment i.e., YG Entertainment and RF Materials go up and down completely randomly.
Pair Corralation between YG Entertainment and RF Materials
Assuming the 90 days trading horizon YG Entertainment is expected to generate 1.48 times less return on investment than RF Materials. In addition to that, YG Entertainment is 1.43 times more volatile than RF Materials Co. It trades about 0.31 of its total potential returns per unit of risk. RF Materials Co is currently generating about 0.65 per unit of volatility. If you would invest 498,500 in RF Materials Co on November 5, 2024 and sell it today you would earn a total of 73,500 from holding RF Materials Co or generate 14.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
YG Entertainment vs. RF Materials Co
Performance |
| Timeline |
| YG Entertainment |
| RF Materials |
YG Entertainment and RF Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YG Entertainment and RF Materials
The main advantage of trading using opposite YG Entertainment and RF Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YG Entertainment position performs unexpectedly, RF Materials 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 RF Materials will offset losses from the drop in RF Materials' 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 |
| RF Materials vs. EBEST Investment Securities | RF Materials vs. LB Investment | RF Materials vs. Golden Bridge Investment | RF Materials vs. Nice Information Telecommunication |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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