Correlation Between FNC Entertainment and DONGKUK STEEL
Can any of the company-specific risk be diversified away by investing in both FNC Entertainment and DONGKUK STEEL 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 DONGKUK STEEL 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 DONGKUK STEEL MILL, you can compare the effects of market volatilities on FNC Entertainment and DONGKUK STEEL 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 DONGKUK STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNC Entertainment and DONGKUK STEEL.
Diversification Opportunities for FNC Entertainment and DONGKUK STEEL
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FNC and DONGKUK is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FNC Entertainment Co and DONGKUK STEEL MILL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGKUK STEEL MILL 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 DONGKUK STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGKUK STEEL MILL has no effect on the direction of FNC Entertainment i.e., FNC Entertainment and DONGKUK STEEL go up and down completely randomly.
Pair Corralation between FNC Entertainment and DONGKUK STEEL
Assuming the 90 days trading horizon FNC Entertainment Co is expected to generate 0.68 times more return on investment than DONGKUK STEEL. However, FNC Entertainment Co is 1.48 times less risky than DONGKUK STEEL. It trades about -0.03 of its potential returns per unit of risk. DONGKUK STEEL MILL is currently generating about -0.03 per unit of risk. If you would invest 546,000 in FNC Entertainment Co on September 3, 2024 and sell it today you would lose (217,000) from holding FNC Entertainment Co or give up 39.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 74.12% |
| Values | Daily Returns |
FNC Entertainment Co vs. DONGKUK STEEL MILL
Performance |
| Timeline |
| FNC Entertainment |
| DONGKUK STEEL MILL |
FNC Entertainment and DONGKUK STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNC Entertainment and DONGKUK STEEL
The main advantage of trading using opposite FNC Entertainment and DONGKUK STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNC Entertainment position performs unexpectedly, DONGKUK STEEL 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 DONGKUK STEEL will offset losses from the drop in DONGKUK STEEL'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 |
| DONGKUK STEEL vs. Samsung Electronics Co | DONGKUK STEEL vs. Samsung Electronics Co | DONGKUK STEEL vs. LG Energy Solution | DONGKUK STEEL vs. SK Hynix |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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