Correlation Between FNC Entertainment and Danal Co
Can any of the company-specific risk be diversified away by investing in both FNC Entertainment and Danal Co 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 Danal Co 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 Danal Co, you can compare the effects of market volatilities on FNC Entertainment and Danal Co 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 Danal Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNC Entertainment and Danal Co.
Diversification Opportunities for FNC Entertainment and Danal Co
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FNC and Danal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FNC Entertainment Co and Danal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danal Co 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 Danal Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danal Co has no effect on the direction of FNC Entertainment i.e., FNC Entertainment and Danal Co go up and down completely randomly.
Pair Corralation between FNC Entertainment and Danal Co
Assuming the 90 days trading horizon FNC Entertainment Co is expected to under-perform the Danal Co. But the stock apears to be less risky and, when comparing its historical volatility, FNC Entertainment Co is 1.4 times less risky than Danal Co. The stock trades about -0.04 of its potential returns per unit of risk. The Danal Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 555,000 in Danal Co on September 12, 2024 and sell it today you would lose (278,000) from holding Danal Co or give up 50.09% 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. Danal Co
Performance |
| Timeline |
| FNC Entertainment |
| Danal Co |
FNC Entertainment and Danal Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNC Entertainment and Danal Co
The main advantage of trading using opposite FNC Entertainment and Danal Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNC Entertainment position performs unexpectedly, Danal Co 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 Danal Co will offset losses from the drop in Danal Co's long position.| FNC Entertainment vs. YG Entertainment | FNC Entertainment vs. JYP Entertainment | FNC Entertainment vs. Cube Entertainment |
| Danal Co vs. Dongbu Insurance Co | Danal Co vs. Dongbang Transport Logistics | Danal Co vs. MEDIANA CoLtd | Danal Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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