Correlation Between Next Entertainment and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Seoam Machinery 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 Seoam Machinery 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 Seoam Machinery Industry, you can compare the effects of market volatilities on Next Entertainment and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Seoam Machinery.
Diversification Opportunities for Next Entertainment and Seoam Machinery
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Next and Seoam is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of Next Entertainment i.e., Next Entertainment and Seoam Machinery go up and down completely randomly.
Pair Corralation between Next Entertainment and Seoam Machinery
Assuming the 90 days trading horizon Next Entertainment World is expected to generate 2.23 times more return on investment than Seoam Machinery. However, Next Entertainment is 2.23 times more volatile than Seoam Machinery Industry. It trades about 0.11 of its potential returns per unit of risk. Seoam Machinery Industry is currently generating about 0.17 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Entertainment World vs. Seoam Machinery Industry
Performance |
| Timeline |
| Next Entertainment World |
| Seoam Machinery Industry |
Next Entertainment and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Seoam Machinery
The main advantage of trading using opposite Next Entertainment and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| Next Entertainment vs. TK Chemical | Next Entertainment vs. Neungyule Education | Next Entertainment vs. Lotte Chilsung Beverage | Next Entertainment vs. Sung Bo Chemicals |
| Seoam Machinery vs. Rainbow Robotics | Seoam Machinery vs. COWINTECH Co | Seoam Machinery vs. CS BEARING CoLtd | Seoam Machinery vs. Young Poong Precision |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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