Correlation Between Next Entertainment and Dongkuk Structures
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Dongkuk Structures 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 Dongkuk Structures 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 Dongkuk Structures Construction, you can compare the effects of market volatilities on Next Entertainment and Dongkuk Structures 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 Dongkuk Structures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Dongkuk Structures.
Diversification Opportunities for Next Entertainment and Dongkuk Structures
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Next and Dongkuk is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Dongkuk Structures Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongkuk Structures 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 Dongkuk Structures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongkuk Structures has no effect on the direction of Next Entertainment i.e., Next Entertainment and Dongkuk Structures go up and down completely randomly.
Pair Corralation between Next Entertainment and Dongkuk Structures
Assuming the 90 days trading horizon Next Entertainment World is expected to generate 2.2 times more return on investment than Dongkuk Structures. However, Next Entertainment is 2.2 times more volatile than Dongkuk Structures Construction. It trades about 0.11 of its potential returns per unit of risk. Dongkuk Structures Construction is currently generating about 0.14 per unit of risk. If you would invest 211,000 in Next Entertainment World on November 27, 2024 and sell it today you would earn a total of 15,000 from holding Next Entertainment World or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Entertainment World vs. Dongkuk Structures Constructio
Performance |
| Timeline |
| Next Entertainment World |
| Dongkuk Structures |
Next Entertainment and Dongkuk Structures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Dongkuk Structures
The main advantage of trading using opposite Next Entertainment and Dongkuk Structures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Dongkuk Structures 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 Dongkuk Structures will offset losses from the drop in Dongkuk Structures' long position.| Next Entertainment vs. TK Chemical | Next Entertainment vs. Neungyule Education | Next Entertainment vs. Lotte Chilsung Beverage | Next Entertainment vs. Sung Bo Chemicals |
| Dongkuk Structures vs. LB Investment | Dongkuk Structures vs. Stic Investments | Dongkuk Structures vs. Eagon Industrial Co | Dongkuk Structures vs. Formetal Co |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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