Correlation Between YG Entertainment and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both YG Entertainment and Busan Industrial 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 Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YG Entertainment and Busan Industrial Co, you can compare the effects of market volatilities on YG Entertainment and Busan Industrial 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 Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of YG Entertainment and Busan Industrial.
Diversification Opportunities for YG Entertainment and Busan Industrial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 122870 and Busan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding YG Entertainment and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial 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 Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of YG Entertainment i.e., YG Entertainment and Busan Industrial go up and down completely randomly.
Pair Corralation between YG Entertainment and Busan Industrial
Assuming the 90 days trading horizon YG Entertainment is expected to generate 1.1 times more return on investment than Busan Industrial. However, YG Entertainment is 1.1 times more volatile than Busan Industrial Co. It trades about 0.02 of its potential returns per unit of risk. Busan Industrial Co is currently generating about -0.01 per unit of risk. If you would invest 4,482,241 in YG Entertainment on September 4, 2024 and sell it today you would earn a total of 442,759 from holding YG Entertainment or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YG Entertainment vs. Busan Industrial Co
Performance |
| Timeline |
| YG Entertainment |
| Busan Industrial |
YG Entertainment and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YG Entertainment and Busan Industrial
The main advantage of trading using opposite YG Entertainment and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YG Entertainment position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| YG Entertainment vs. JYP Entertainment | YG Entertainment vs. SM Entertainment Co | YG Entertainment vs. Cube Entertainment | YG Entertainment vs. FNC Entertainment Co |
| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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