Correlation Between JYP Entertainment and BitNine Co

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

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

Diversification Opportunities for JYP Entertainment and BitNine Co

0.86

Correlation Coefficient

JYP Entertainment  BitNine Co

Very poor diversification

The 3 months correlation between JYP and BitNine is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and BitNine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitNine Co 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 BitNine Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitNine Co has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and BitNine Co go up and down completely randomly.

Pair Corralation between JYP Entertainment and BitNine Co

Assuming the 90 days trading horizon JYP Entertainment is expected to generate 1.73 times less return on investment than BitNine Co. But when comparing it to its historical volatility, JYP Entertainment is 3.61 times less risky than BitNine Co. It trades about 0.2 of its potential returns per unit of risk. BitNine Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  179,643  in BitNine Co on September 28, 2024 and sell it today you would earn a total of  58,857  from holding BitNine Co or generate 32.76% return on investment over 90 days.

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

JYP Entertainment  vs.  BitNine Co

JYP Entertainment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment are ranked lower than 15 (%) 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.

BitNine Co

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BitNine Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BitNine Co sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JYP Entertainment and BitNine Co

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

The idea behind JYP Entertainment and BitNine Co 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.