Correlation Between Digital Multimedia and Genie Music
Can any of the company-specific risk be diversified away by investing in both Digital Multimedia and Genie Music 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 Digital Multimedia and Genie Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Multimedia Technology and Genie Music, you can compare the effects of market volatilities on Digital Multimedia and Genie Music 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 Digital Multimedia with a short position of Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Multimedia and Genie Music.
Diversification Opportunities for Digital Multimedia and Genie Music
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Digital and Genie is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Digital Multimedia Technology and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music and Digital Multimedia 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 Digital Multimedia Technology are associated (or correlated) with Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of Digital Multimedia i.e., Digital Multimedia and Genie Music go up and down completely randomly.
Pair Corralation between Digital Multimedia and Genie Music
Assuming the 90 days trading horizon Digital Multimedia Technology is expected to generate 1.14 times more return on investment than Genie Music. However, Digital Multimedia is 1.14 times more volatile than Genie Music. It trades about -0.16 of its potential returns per unit of risk. Genie Music is currently generating about -0.28 per unit of risk. If you would invest 182,000 in Digital Multimedia Technology on August 27, 2024 and sell it today you would lose (20,200) from holding Digital Multimedia Technology or give up 11.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Multimedia Technology vs. Genie Music
Performance |
| Timeline |
| Digital Multimedia |
| Genie Music |
Digital Multimedia and Genie Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Multimedia and Genie Music
The main advantage of trading using opposite Digital Multimedia and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Multimedia position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music's long position.| Digital Multimedia vs. TJ media Co | Digital Multimedia vs. Kaonmedia Co | Digital Multimedia vs. SM Entertainment Co | Digital Multimedia vs. Tamul Multimedia Co |
| Genie Music vs. AfreecaTV Co | Genie Music vs. SS TECH | Genie Music vs. Busan Industrial Co | Genie Music vs. Busan Ind |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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