Correlation Between FNC Entertainment and AFW
Can any of the company-specific risk be diversified away by investing in both FNC Entertainment and AFW 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 AFW 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 AFW Co, you can compare the effects of market volatilities on FNC Entertainment and AFW 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 AFW. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNC Entertainment and AFW.
Diversification Opportunities for FNC Entertainment and AFW
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FNC and AFW is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding FNC Entertainment Co and AFW Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFW 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 AFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFW Co has no effect on the direction of FNC Entertainment i.e., FNC Entertainment and AFW go up and down completely randomly.
Pair Corralation between FNC Entertainment and AFW
Assuming the 90 days trading horizon FNC Entertainment Co is expected to generate 0.71 times more return on investment than AFW. However, FNC Entertainment Co is 1.42 times less risky than AFW. It trades about -0.04 of its potential returns per unit of risk. AFW Co is currently generating about -0.06 per unit of risk. If you would invest 546,000 in FNC Entertainment Co on September 12, 2024 and sell it today you would lose (241,000) from holding FNC Entertainment Co or give up 44.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
FNC Entertainment Co vs. AFW Co
Performance |
| Timeline |
| FNC Entertainment |
| AFW Co |
FNC Entertainment and AFW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNC Entertainment and AFW
The main advantage of trading using opposite FNC Entertainment and AFW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNC Entertainment position performs unexpectedly, AFW 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 AFW will offset losses from the drop in AFW's long position.| FNC Entertainment vs. YG Entertainment | FNC Entertainment vs. JYP Entertainment | FNC Entertainment vs. Cube Entertainment |
| AFW vs. MediaZen | AFW vs. FNC Entertainment Co | AFW vs. Korea Alcohol Industrial | AFW vs. Lotte Chilsung Beverage |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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