Correlation Between FNC Entertainment and Naver
Can any of the company-specific risk be diversified away by investing in both FNC Entertainment and Naver 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 Naver 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 Naver, you can compare the effects of market volatilities on FNC Entertainment and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNC Entertainment and Naver.
Diversification Opportunities for FNC Entertainment and Naver
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FNC and Naver is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding FNC Entertainment Co and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of FNC Entertainment i.e., FNC Entertainment and Naver go up and down completely randomly.
Pair Corralation between FNC Entertainment and Naver
Assuming the 90 days trading horizon FNC Entertainment Co is expected to under-perform the Naver. In addition to that, FNC Entertainment is 1.18 times more volatile than Naver. It trades about -0.08 of its total potential returns per unit of risk. Naver is currently generating about 0.01 per unit of volatility. If you would invest 20,250,000 in Naver on September 14, 2024 and sell it today you would earn a total of 550,000 from holding Naver or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
FNC Entertainment Co vs. Naver
Performance |
| Timeline |
| FNC Entertainment |
| Naver |
FNC Entertainment and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNC Entertainment and Naver
The main advantage of trading using opposite FNC Entertainment and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNC Entertainment position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| FNC Entertainment vs. YG Entertainment | FNC Entertainment vs. JYP Entertainment | FNC Entertainment vs. Cube Entertainment |
| Naver vs. YG Entertainment | Naver vs. JYP Entertainment | Naver vs. Cube Entertainment | Naver vs. FNC Entertainment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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