Correlation Between FNC Entertainment and Daewon Media
Can any of the company-specific risk be diversified away by investing in both FNC Entertainment and Daewon Media 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 Daewon Media 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 Daewon Media Co, you can compare the effects of market volatilities on FNC Entertainment and Daewon Media 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 Daewon Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNC Entertainment and Daewon Media.
Diversification Opportunities for FNC Entertainment and Daewon Media
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FNC and Daewon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FNC Entertainment Co and Daewon Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Media 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 Daewon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Media has no effect on the direction of FNC Entertainment i.e., FNC Entertainment and Daewon Media go up and down completely randomly.
Pair Corralation between FNC Entertainment and Daewon Media
Assuming the 90 days trading horizon FNC Entertainment Co is expected to under-perform the Daewon Media. In addition to that, FNC Entertainment is 1.36 times more volatile than Daewon Media Co. It trades about -0.09 of its total potential returns per unit of risk. Daewon Media Co is currently generating about -0.09 per unit of volatility. If you would invest 1,201,807 in Daewon Media Co on September 12, 2024 and sell it today you would lose (472,807) from holding Daewon Media Co or give up 39.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNC Entertainment Co vs. Daewon Media Co
Performance |
| Timeline |
| FNC Entertainment |
| Daewon Media |
FNC Entertainment and Daewon Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNC Entertainment and Daewon Media
The main advantage of trading using opposite FNC Entertainment and Daewon Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNC Entertainment position performs unexpectedly, Daewon Media 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 Daewon Media will offset losses from the drop in Daewon Media's long position.| FNC Entertainment vs. YG Entertainment | FNC Entertainment vs. JYP Entertainment | FNC Entertainment vs. Cube Entertainment |
| Daewon Media vs. YG Entertainment | Daewon Media vs. JYP Entertainment | Daewon Media vs. Cube Entertainment | Daewon Media 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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