Correlation Between Next Entertainment and Playgram
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Playgram 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 Playgram 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 Playgram Co, you can compare the effects of market volatilities on Next Entertainment and Playgram 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 Playgram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Playgram.
Diversification Opportunities for Next Entertainment and Playgram
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Next and Playgram is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Playgram Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playgram 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 Playgram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playgram has no effect on the direction of Next Entertainment i.e., Next Entertainment and Playgram go up and down completely randomly.
Pair Corralation between Next Entertainment and Playgram
Assuming the 90 days trading horizon Next Entertainment World is expected to under-perform the Playgram. But the stock apears to be less risky and, when comparing its historical volatility, Next Entertainment World is 1.04 times less risky than Playgram. The stock trades about -0.15 of its potential returns per unit of risk. The Playgram Co is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 41,100 in Playgram Co on November 8, 2024 and sell it today you would lose (3,000) from holding Playgram Co or give up 7.3% 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. Playgram Co
Performance |
| Timeline |
| Next Entertainment World |
| Playgram |
Next Entertainment and Playgram Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Playgram
The main advantage of trading using opposite Next Entertainment and Playgram positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Playgram 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 Playgram will offset losses from the drop in Playgram'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 |
| Playgram vs. LG Chemicals | Playgram vs. POSCO Holdings | Playgram vs. Hanwha Solutions | Playgram vs. Lotte Chemical Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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