Correlation Between Daechang Steel and JYP Entertainment
Can any of the company-specific risk be diversified away by investing in both Daechang Steel and JYP 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 Daechang Steel and JYP Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daechang Steel Co and JYP Entertainment Corp, you can compare the effects of market volatilities on Daechang Steel and JYP 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 Daechang Steel with a short position of JYP Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daechang Steel and JYP Entertainment.
Diversification Opportunities for Daechang Steel and JYP Entertainment
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daechang and JYP is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Daechang Steel Co and JYP Entertainment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JYP Entertainment Corp and Daechang Steel 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 Daechang Steel Co are associated (or correlated) with JYP Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JYP Entertainment Corp has no effect on the direction of Daechang Steel i.e., Daechang Steel and JYP Entertainment go up and down completely randomly.
Pair Corralation between Daechang Steel and JYP Entertainment
Assuming the 90 days trading horizon Daechang Steel is expected to generate 46.14 times less return on investment than JYP Entertainment. But when comparing it to its historical volatility, Daechang Steel Co is 1.59 times less risky than JYP Entertainment. It trades about 0.02 of its potential returns per unit of risk. JYP Entertainment Corp is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 5,080,000 in JYP Entertainment Corp on August 29, 2024 and sell it today you would earn a total of 1,900,000 from holding JYP Entertainment Corp or generate 37.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daechang Steel Co vs. JYP Entertainment Corp
Performance |
| Timeline |
| Daechang Steel |
| JYP Entertainment Corp |
Daechang Steel and JYP Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daechang Steel and JYP Entertainment
The main advantage of trading using opposite Daechang Steel and JYP Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daechang Steel position performs unexpectedly, JYP 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 JYP Entertainment will offset losses from the drop in JYP Entertainment's long position.| Daechang Steel vs. LG Chemicals | Daechang Steel vs. Lotte Chemical Corp | Daechang Steel vs. Hyundai Steel | Daechang Steel vs. Seah Steel Corp |
| JYP Entertainment vs. PH Tech Co | JYP Entertainment vs. A Tech Solution Co | JYP Entertainment vs. SS TECH | JYP Entertainment vs. Ecoplastic |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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