Correlation Between Next Entertainment and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Woorim 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 Woorim 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 Woorim Machinery Co, you can compare the effects of market volatilities on Next Entertainment and Woorim 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Woorim Machinery.
Diversification Opportunities for Next Entertainment and Woorim Machinery
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Next and Woorim is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Next Entertainment i.e., Next Entertainment and Woorim Machinery go up and down completely randomly.
Pair Corralation between Next Entertainment and Woorim Machinery
Assuming the 90 days trading horizon Next Entertainment World is expected to under-perform the Woorim Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Next Entertainment World is 1.2 times less risky than Woorim Machinery. The stock trades about -0.07 of its potential returns per unit of risk. The Woorim Machinery Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 702,181 in Woorim Machinery Co on October 13, 2024 and sell it today you would lose (175,181) from holding Woorim Machinery Co or give up 24.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Entertainment World vs. Woorim Machinery Co
Performance |
| Timeline |
| Next Entertainment World |
| Woorim Machinery |
Next Entertainment and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Woorim Machinery
The main advantage of trading using opposite Next Entertainment and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Woorim 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| Next Entertainment vs. Hyundai Home Shopping | Next Entertainment vs. Mobile Appliance | Next Entertainment vs. EV Advanced Material | Next Entertainment vs. Nable Communications |
| Woorim Machinery vs. Next Entertainment World | Woorim Machinery vs. SKONEC Entertainment Co | Woorim Machinery vs. SAMG Entertainment Co | Woorim Machinery vs. MEDIANA CoLtd |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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