Correlation Between FNC Entertainment and Taegu Broadcasting
Can any of the company-specific risk be diversified away by investing in both FNC Entertainment and Taegu Broadcasting 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 Taegu Broadcasting 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 Taegu Broadcasting, you can compare the effects of market volatilities on FNC Entertainment and Taegu Broadcasting 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 Taegu Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNC Entertainment and Taegu Broadcasting.
Diversification Opportunities for FNC Entertainment and Taegu Broadcasting
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FNC and Taegu is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding FNC Entertainment Co and Taegu Broadcasting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taegu Broadcasting 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 Taegu Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taegu Broadcasting has no effect on the direction of FNC Entertainment i.e., FNC Entertainment and Taegu Broadcasting go up and down completely randomly.
Pair Corralation between FNC Entertainment and Taegu Broadcasting
Assuming the 90 days trading horizon FNC Entertainment Co is expected to under-perform the Taegu Broadcasting. In addition to that, FNC Entertainment is 1.62 times more volatile than Taegu Broadcasting. It trades about -0.04 of its total potential returns per unit of risk. Taegu Broadcasting is currently generating about -0.05 per unit of volatility. If you would invest 92,300 in Taegu Broadcasting on September 3, 2024 and sell it today you would lose (11,500) from holding Taegu Broadcasting or give up 12.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNC Entertainment Co vs. Taegu Broadcasting
Performance |
| Timeline |
| FNC Entertainment |
| Taegu Broadcasting |
FNC Entertainment and Taegu Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNC Entertainment and Taegu Broadcasting
The main advantage of trading using opposite FNC Entertainment and Taegu Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNC Entertainment position performs unexpectedly, Taegu Broadcasting 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 Taegu Broadcasting will offset losses from the drop in Taegu Broadcasting's long position.| FNC Entertainment vs. Korea New Network | FNC Entertainment vs. ICD Co | FNC Entertainment vs. DYPNF CoLtd | FNC Entertainment vs. Busan Industrial Co |
| Taegu Broadcasting vs. Korea New Network | Taegu Broadcasting vs. ICD Co | Taegu Broadcasting vs. DYPNF CoLtd | Taegu Broadcasting vs. Busan Industrial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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