Correlation Between Next Entertainment and Iljin Display
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Iljin Display 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 Iljin Display 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 Iljin Display, you can compare the effects of market volatilities on Next Entertainment and Iljin Display 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 Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Iljin Display.
Diversification Opportunities for Next Entertainment and Iljin Display
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Next and Iljin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of Next Entertainment i.e., Next Entertainment and Iljin Display go up and down completely randomly.
Pair Corralation between Next Entertainment and Iljin Display
Assuming the 90 days trading horizon Next Entertainment World is expected to under-perform the Iljin Display. In addition to that, Next Entertainment is 1.62 times more volatile than Iljin Display. It trades about -0.06 of its total potential returns per unit of risk. Iljin Display is currently generating about -0.01 per unit of volatility. If you would invest 88,800 in Iljin Display on November 8, 2024 and sell it today you would lose (2,200) from holding Iljin Display or give up 2.48% 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. Iljin Display
Performance |
| Timeline |
| Next Entertainment World |
| Iljin Display |
Next Entertainment and Iljin Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Iljin Display
The main advantage of trading using opposite Next Entertainment and Iljin Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Iljin Display 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 Iljin Display will offset losses from the drop in Iljin Display'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 |
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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 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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