Correlation Between MS Autotech and SM Entertainment
Can any of the company-specific risk be diversified away by investing in both MS Autotech 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 MS Autotech and SM Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MS Autotech CoLtd and SM Entertainment Co, you can compare the effects of market volatilities on MS Autotech 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 MS Autotech with a short position of SM Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MS Autotech and SM Entertainment.
Diversification Opportunities for MS Autotech and SM Entertainment
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 123040 and 041510 is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding MS Autotech CoLtd and SM Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Entertainment and MS Autotech 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 MS Autotech CoLtd 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 MS Autotech i.e., MS Autotech and SM Entertainment go up and down completely randomly.
Pair Corralation between MS Autotech and SM Entertainment
Assuming the 90 days trading horizon MS Autotech is expected to generate 1.22 times less return on investment than SM Entertainment. But when comparing it to its historical volatility, MS Autotech CoLtd is 1.13 times less risky than SM Entertainment. It trades about 0.07 of its potential returns per unit of risk. SM Entertainment Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,589,844 in SM Entertainment Co on October 23, 2024 and sell it today you would earn a total of 240,156 from holding SM Entertainment Co or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MS Autotech CoLtd vs. SM Entertainment Co
Performance |
| Timeline |
| MS Autotech CoLtd |
| SM Entertainment |
MS Autotech and SM Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MS Autotech and SM Entertainment
The main advantage of trading using opposite MS Autotech and SM Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MS Autotech 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.| MS Autotech vs. Koryo Credit Information | MS Autotech vs. Daechang Steel Co | MS Autotech vs. Daehan Steel | MS Autotech vs. Wonil Special Steel |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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