Correlation Between JYP Entertainment and GAMEVIL

Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and GAMEVIL 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 JYP Entertainment and GAMEVIL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JYP Entertainment and GAMEVIL, you can compare the effects of market volatilities on JYP Entertainment and GAMEVIL 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 JYP Entertainment with a short position of GAMEVIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and GAMEVIL.

Diversification Opportunities for JYP Entertainment and GAMEVIL

0.91

Correlation Coefficient

JYP Entertainment  GAMEVIL

Almost no diversification

The 3 months correlation between JYP and GAMEVIL is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and GAMEVIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMEVIL and JYP 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 JYP Entertainment are associated (or correlated) with GAMEVIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMEVIL has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and GAMEVIL go up and down completely randomly.

Pair Corralation between JYP Entertainment and GAMEVIL

Assuming the 90 days trading horizon JYP Entertainment is expected to generate 1.61 times less return on investment than GAMEVIL. But when comparing it to its historical volatility, JYP Entertainment is 1.69 times less risky than GAMEVIL. It trades about 0.09 of its potential returns per unit of risk. GAMEVIL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,660,000  in GAMEVIL on September 14, 2024 and sell it today you would earn a total of  1,160,000  from holding GAMEVIL or generate 43.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

JYP Entertainment  vs.  GAMEVIL

JYP Entertainment

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JYP Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

GAMEVIL

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GAMEVIL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GAMEVIL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JYP Entertainment and GAMEVIL

The main advantage of trading using opposite JYP Entertainment and GAMEVIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JYP Entertainment position performs unexpectedly, GAMEVIL 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 GAMEVIL will offset losses from the drop in GAMEVIL's long position.

The idea behind JYP Entertainment and GAMEVIL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.