Correlation Between Next Entertainment and Dragonfly
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Dragonfly 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 Dragonfly 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 Dragonfly GF Co, you can compare the effects of market volatilities on Next Entertainment and Dragonfly 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 Dragonfly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Dragonfly.
Diversification Opportunities for Next Entertainment and Dragonfly
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Next and Dragonfly is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Dragonfly GF Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dragonfly GF 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 Dragonfly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dragonfly GF has no effect on the direction of Next Entertainment i.e., Next Entertainment and Dragonfly go up and down completely randomly.
Pair Corralation between Next Entertainment and Dragonfly
Assuming the 90 days trading horizon Next Entertainment World is expected to under-perform the Dragonfly. But the stock apears to be less risky and, when comparing its historical volatility, Next Entertainment World is 3.05 times less risky than Dragonfly. The stock trades about -0.07 of its potential returns per unit of risk. The Dragonfly GF Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 129,400 in Dragonfly GF Co on November 4, 2024 and sell it today you would earn a total of 5,600 from holding Dragonfly GF Co or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Entertainment World vs. Dragonfly GF Co
Performance |
| Timeline |
| Next Entertainment World |
| Dragonfly GF |
Next Entertainment and Dragonfly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Dragonfly
The main advantage of trading using opposite Next Entertainment and Dragonfly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Dragonfly 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 Dragonfly will offset losses from the drop in Dragonfly's long position.| Next Entertainment vs. Solus Advanced Materials | Next Entertainment vs. Hanjoo Light Metal | Next Entertainment vs. LG Chemicals | Next Entertainment vs. Top Material Co |
| Dragonfly vs. Miwon Chemical | Dragonfly vs. SH Energy Chemical | Dragonfly vs. TK Chemical | Dragonfly vs. Kyung In Synthetic 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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