Correlation Between Next Entertainment and Taeyang Metal
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Taeyang Metal 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 Next Entertainment and Taeyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Entertainment World and Taeyang Metal Industrial, you can compare the effects of market volatilities on Next Entertainment and Taeyang Metal 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 Next Entertainment with a short position of Taeyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Taeyang Metal.
Diversification Opportunities for Next Entertainment and Taeyang Metal
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Next and Taeyang is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Taeyang Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taeyang Metal Industrial and Next 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 Next Entertainment World are associated (or correlated) with Taeyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taeyang Metal Industrial has no effect on the direction of Next Entertainment i.e., Next Entertainment and Taeyang Metal go up and down completely randomly.
Pair Corralation between Next Entertainment and Taeyang Metal
Assuming the 90 days trading horizon Next Entertainment World is expected to under-perform the Taeyang Metal. But the stock apears to be less risky and, when comparing its historical volatility, Next Entertainment World is 2.04 times less risky than Taeyang Metal. The stock trades about -0.08 of its potential returns per unit of risk. The Taeyang Metal Industrial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 331,084 in Taeyang Metal Industrial on August 31, 2024 and sell it today you would earn a total of 85,416 from holding Taeyang Metal Industrial or generate 25.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Entertainment World vs. Taeyang Metal Industrial
Performance |
| Timeline |
| Next Entertainment World |
| Taeyang Metal Industrial |
Next Entertainment and Taeyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Taeyang Metal
The main advantage of trading using opposite Next Entertainment and Taeyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Taeyang Metal 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 Taeyang Metal will offset losses from the drop in Taeyang Metal's long position.| Next Entertainment vs. AfreecaTV Co | Next Entertainment vs. Seegene | Next Entertainment vs. SS TECH | Next Entertainment vs. Busan Industrial Co |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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