Correlation Between AfreecaTV and MegaStudy
Can any of the company-specific risk be diversified away by investing in both AfreecaTV and MegaStudy 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 AfreecaTV and MegaStudy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfreecaTV Co and MegaStudy Co, you can compare the effects of market volatilities on AfreecaTV and MegaStudy 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 AfreecaTV with a short position of MegaStudy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfreecaTV and MegaStudy.
Diversification Opportunities for AfreecaTV and MegaStudy
Very weak diversification
The 3 months correlation between AfreecaTV and MegaStudy is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding AfreecaTV Co and MegaStudy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MegaStudy and AfreecaTV 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 AfreecaTV Co are associated (or correlated) with MegaStudy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MegaStudy has no effect on the direction of AfreecaTV i.e., AfreecaTV and MegaStudy go up and down completely randomly.
Pair Corralation between AfreecaTV and MegaStudy
Assuming the 90 days trading horizon AfreecaTV is expected to generate 1.23 times less return on investment than MegaStudy. In addition to that, AfreecaTV is 4.49 times more volatile than MegaStudy Co. It trades about 0.04 of its total potential returns per unit of risk. MegaStudy Co is currently generating about 0.23 per unit of volatility. If you would invest 1,124,000 in MegaStudy Co on September 20, 2024 and sell it today you would earn a total of 36,000 from holding MegaStudy Co or generate 3.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AfreecaTV Co vs. MegaStudy Co
Performance |
Timeline |
AfreecaTV |
MegaStudy |
AfreecaTV and MegaStudy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AfreecaTV and MegaStudy
The main advantage of trading using opposite AfreecaTV and MegaStudy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfreecaTV position performs unexpectedly, MegaStudy 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 MegaStudy will offset losses from the drop in MegaStudy's long position.The idea behind AfreecaTV Co and MegaStudy 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.MegaStudy vs. DB Financial Investment | MegaStudy vs. Foodnamoo | MegaStudy vs. Samick Musical Instruments | MegaStudy vs. Hwangkum Steel Technology |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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