Correlation Between Next Entertainment and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Samsung SDI 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 Samsung SDI 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 Samsung SDI, you can compare the effects of market volatilities on Next Entertainment and Samsung SDI 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 Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Samsung SDI.
Diversification Opportunities for Next Entertainment and Samsung SDI
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Next and Samsung is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI 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 Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Next Entertainment i.e., Next Entertainment and Samsung SDI go up and down completely randomly.
Pair Corralation between Next Entertainment and Samsung SDI
Assuming the 90 days trading horizon Next Entertainment World is expected to generate 0.91 times more return on investment than Samsung SDI. However, Next Entertainment World is 1.09 times less risky than Samsung SDI. It trades about -0.15 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.27 per unit of risk. If you would invest 223,000 in Next Entertainment World on November 8, 2024 and sell it today you would lose (17,000) from holding Next Entertainment World or give up 7.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Entertainment World vs. Samsung SDI
Performance |
| Timeline |
| Next Entertainment World |
| Samsung SDI |
Next Entertainment and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Samsung SDI
The main advantage of trading using opposite Next Entertainment and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Samsung SDI 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 Samsung SDI will offset losses from the drop in Samsung SDI's long position.| Next Entertainment vs. SM Entertainment Co | Next Entertainment vs. Sangsin Energy Display | Next Entertainment vs. Iljin Display | Next Entertainment vs. Alton Sports CoLtd |
| Samsung SDI vs. Lotte Data Communication | Samsung SDI vs. Digital Power Communications | Samsung SDI vs. Daishin Information Communications | Samsung SDI vs. Korea Information Communications |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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