Correlation Between FNC Entertainment and Dongwon Metal
Can any of the company-specific risk be diversified away by investing in both FNC Entertainment and Dongwon Metal 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 FNC Entertainment and Dongwon Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNC Entertainment Co and Dongwon Metal Co, you can compare the effects of market volatilities on FNC Entertainment and Dongwon Metal 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 FNC Entertainment with a short position of Dongwon Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNC Entertainment and Dongwon Metal.
Diversification Opportunities for FNC Entertainment and Dongwon Metal
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FNC and Dongwon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding FNC Entertainment Co and Dongwon Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwon Metal and FNC 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 FNC Entertainment Co are associated (or correlated) with Dongwon Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwon Metal has no effect on the direction of FNC Entertainment i.e., FNC Entertainment and Dongwon Metal go up and down completely randomly.
Pair Corralation between FNC Entertainment and Dongwon Metal
Assuming the 90 days trading horizon FNC Entertainment Co is expected to under-perform the Dongwon Metal. But the stock apears to be less risky and, when comparing its historical volatility, FNC Entertainment Co is 2.78 times less risky than Dongwon Metal. The stock trades about -0.06 of its potential returns per unit of risk. The Dongwon Metal Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 119,400 in Dongwon Metal Co on September 14, 2024 and sell it today you would earn a total of 53,600 from holding Dongwon Metal Co or generate 44.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNC Entertainment Co vs. Dongwon Metal Co
Performance |
| Timeline |
| FNC Entertainment |
| Dongwon Metal |
FNC Entertainment and Dongwon Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNC Entertainment and Dongwon Metal
The main advantage of trading using opposite FNC Entertainment and Dongwon Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNC Entertainment position performs unexpectedly, Dongwon Metal 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 Dongwon Metal will offset losses from the drop in Dongwon Metal's long position.| FNC Entertainment vs. YG Entertainment | FNC Entertainment vs. JYP Entertainment | FNC Entertainment vs. Cube Entertainment |
| Dongwon Metal vs. Samsung Electronics Co | Dongwon Metal vs. Samsung Electronics Co | Dongwon Metal vs. SK Hynix | Dongwon Metal vs. POSCO Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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