Correlation Between Next Entertainment and Dongbang Transport
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Dongbang Transport 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 Dongbang Transport 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 Dongbang Transport Logistics, you can compare the effects of market volatilities on Next Entertainment and Dongbang Transport 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 Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Dongbang Transport.
Diversification Opportunities for Next Entertainment and Dongbang Transport
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Next and Dongbang is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport 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 Dongbang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Transport has no effect on the direction of Next Entertainment i.e., Next Entertainment and Dongbang Transport go up and down completely randomly.
Pair Corralation between Next Entertainment and Dongbang Transport
Assuming the 90 days trading horizon Next Entertainment World is expected to under-perform the Dongbang Transport. But the stock apears to be less risky and, when comparing its historical volatility, Next Entertainment World is 1.24 times less risky than Dongbang Transport. The stock trades about -0.08 of its potential returns per unit of risk. The Dongbang Transport Logistics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 232,000 in Dongbang Transport Logistics on August 31, 2024 and sell it today you would lose (4,500) from holding Dongbang Transport Logistics or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Entertainment World vs. Dongbang Transport Logistics
Performance |
| Timeline |
| Next Entertainment World |
| Dongbang Transport |
Next Entertainment and Dongbang Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Dongbang Transport
The main advantage of trading using opposite Next Entertainment and Dongbang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Dongbang Transport 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 Dongbang Transport will offset losses from the drop in Dongbang Transport's long position.| Next Entertainment vs. AfreecaTV Co | Next Entertainment vs. Seegene | Next Entertainment vs. SS TECH | Next Entertainment vs. Busan Industrial Co |
| Dongbang Transport vs. AptaBio Therapeutics | Dongbang Transport vs. Daewoo SBI SPAC | Dongbang Transport vs. Dream Security co | Dongbang Transport 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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