Correlation Between YG Entertainment and Konan Technology
Can any of the company-specific risk be diversified away by investing in both YG Entertainment and Konan Technology 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 Konan Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YG Entertainment and Konan Technology, you can compare the effects of market volatilities on YG Entertainment and Konan Technology 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 Konan Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of YG Entertainment and Konan Technology.
Diversification Opportunities for YG Entertainment and Konan Technology
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 122870 and Konan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding YG Entertainment and Konan Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konan Technology 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 Konan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konan Technology has no effect on the direction of YG Entertainment i.e., YG Entertainment and Konan Technology go up and down completely randomly.
Pair Corralation between YG Entertainment and Konan Technology
Assuming the 90 days trading horizon YG Entertainment is expected to generate 1.12 times less return on investment than Konan Technology. But when comparing it to its historical volatility, YG Entertainment is 1.74 times less risky than Konan Technology. It trades about 0.11 of its potential returns per unit of risk. Konan Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,731,000 in Konan Technology on September 21, 2024 and sell it today you would earn a total of 439,000 from holding Konan Technology or generate 25.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
YG Entertainment vs. Konan Technology
Performance |
| Timeline |
| YG Entertainment |
| Konan Technology |
YG Entertainment and Konan Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YG Entertainment and Konan Technology
The main advantage of trading using opposite YG Entertainment and Konan Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YG Entertainment position performs unexpectedly, Konan Technology 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 Konan Technology will offset losses from the drop in Konan Technology's long position.| YG Entertainment vs. EV Advanced Material | YG Entertainment vs. WONIK Materials CoLtd | YG Entertainment vs. Lotte Data Communication | YG Entertainment vs. SK Telecom Co |
| Konan Technology vs. RFTech Co | Konan Technology vs. YG Entertainment | Konan Technology vs. MediaZen | Konan Technology vs. Nasmedia 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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