Correlation Between Next Entertainment and Coloray International
Can any of the company-specific risk be diversified away by investing in both Next Entertainment and Coloray International 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 Coloray International 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 Coloray International Investment, you can compare the effects of market volatilities on Next Entertainment and Coloray International 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 Coloray International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Entertainment and Coloray International.
Diversification Opportunities for Next Entertainment and Coloray International
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Next and Coloray is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Coloray International Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloray International 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 Coloray International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloray International has no effect on the direction of Next Entertainment i.e., Next Entertainment and Coloray International go up and down completely randomly.
Pair Corralation between Next Entertainment and Coloray International
Assuming the 90 days trading horizon Next Entertainment is expected to generate 10.48 times less return on investment than Coloray International. In addition to that, Next Entertainment is 1.14 times more volatile than Coloray International Investment. It trades about 0.04 of its total potential returns per unit of risk. Coloray International Investment is currently generating about 0.48 per unit of volatility. If you would invest 55,100 in Coloray International Investment on October 11, 2024 and sell it today you would earn a total of 11,900 from holding Coloray International Investment or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Entertainment World vs. Coloray International Investme
Performance |
| Timeline |
| Next Entertainment World |
| Coloray International |
Next Entertainment and Coloray International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Entertainment and Coloray International
The main advantage of trading using opposite Next Entertainment and Coloray International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Entertainment position performs unexpectedly, Coloray International 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 Coloray International will offset losses from the drop in Coloray International's long position.| Next Entertainment vs. Chorokbaem Healthcare Co | Next Entertainment vs. Lion Chemtech Co | Next Entertainment vs. Automobile Pc | Next Entertainment vs. ABOV Semiconductor Co |
| Coloray International vs. Next Entertainment World | Coloray International vs. Daejung Chemicals Metals | Coloray International vs. Jinro Distillers Co | Coloray International vs. Nasmedia 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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