Correlation Between SM Entertainment and Myoung Shin
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and Myoung Shin 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 SM Entertainment and Myoung Shin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Entertainment Co and Myoung Shin Industrial, you can compare the effects of market volatilities on SM Entertainment and Myoung Shin 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 SM Entertainment with a short position of Myoung Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and Myoung Shin.
Diversification Opportunities for SM Entertainment and Myoung Shin
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 041510 and Myoung is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and Myoung Shin Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myoung Shin Industrial and SM 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 SM Entertainment Co are associated (or correlated) with Myoung Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myoung Shin Industrial has no effect on the direction of SM Entertainment i.e., SM Entertainment and Myoung Shin go up and down completely randomly.
Pair Corralation between SM Entertainment and Myoung Shin
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 0.81 times more return on investment than Myoung Shin. However, SM Entertainment Co is 1.23 times less risky than Myoung Shin. It trades about 0.1 of its potential returns per unit of risk. Myoung Shin Industrial is currently generating about -0.09 per unit of risk. If you would invest 6,610,000 in SM Entertainment Co on September 26, 2024 and sell it today you would earn a total of 970,000 from holding SM Entertainment Co or generate 14.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SM Entertainment Co vs. Myoung Shin Industrial
Performance |
Timeline |
SM Entertainment |
Myoung Shin Industrial |
SM Entertainment and Myoung Shin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SM Entertainment and Myoung Shin
The main advantage of trading using opposite SM Entertainment and Myoung Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, Myoung Shin 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 Myoung Shin will offset losses from the drop in Myoung Shin's long position.SM Entertainment vs. Samsung Electronics Co | SM Entertainment vs. Samsung Electronics Co | SM Entertainment vs. KB Financial Group | SM Entertainment vs. Shinhan Financial Group |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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