Correlation Between GiantStep and SM Entertainment
Can any of the company-specific risk be diversified away by investing in both GiantStep and SM Entertainment 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 GiantStep and SM Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GiantStep Co and SM Entertainment Co, you can compare the effects of market volatilities on GiantStep and SM Entertainment 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 GiantStep with a short position of SM Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GiantStep and SM Entertainment.
Diversification Opportunities for GiantStep and SM Entertainment
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GiantStep and 041510 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding GiantStep Co and SM Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Entertainment and GiantStep 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 GiantStep Co are associated (or correlated) with SM Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Entertainment has no effect on the direction of GiantStep i.e., GiantStep and SM Entertainment go up and down completely randomly.
Pair Corralation between GiantStep and SM Entertainment
Assuming the 90 days trading horizon GiantStep Co is expected to generate 1.72 times more return on investment than SM Entertainment. However, GiantStep is 1.72 times more volatile than SM Entertainment Co. It trades about 0.39 of its potential returns per unit of risk. SM Entertainment Co is currently generating about -0.06 per unit of risk. If you would invest 502,000 in GiantStep Co on October 9, 2024 and sell it today you would earn a total of 186,000 from holding GiantStep Co or generate 37.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GiantStep Co vs. SM Entertainment Co
Performance |
| Timeline |
| GiantStep |
| SM Entertainment |
GiantStep and SM Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GiantStep and SM Entertainment
The main advantage of trading using opposite GiantStep and SM Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GiantStep position performs unexpectedly, SM Entertainment 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 SM Entertainment will offset losses from the drop in SM Entertainment's long position.| GiantStep vs. Korean Drug Co | GiantStep vs. Settlebank | GiantStep vs. Lotte Non Life Insurance | GiantStep vs. Koryo Credit Information |
| SM Entertainment vs. YG Entertainment | SM Entertainment vs. JYP Entertainment | SM Entertainment vs. Cube Entertainment | SM Entertainment 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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