Correlation Between YG Entertainment and Elentec Co

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

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

Diversification Opportunities for YG Entertainment and Elentec Co

-0.78

Correlation Coefficient

YG Entertainment  Elentec Co

Pay attention - limited upside

The 3 months correlation between 122870 and Elentec is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding YG Entertainment and Elentec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elentec Co and YG 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 YG Entertainment are associated (or correlated) with Elentec Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elentec Co has no effect on the direction of YG Entertainment i.e., YG Entertainment and Elentec Co go up and down completely randomly.

Pair Corralation between YG Entertainment and Elentec Co

Assuming the 90 days trading horizon YG Entertainment is expected to under-perform the Elentec Co. But the stock apears to be less risky and, when comparing its historical volatility, YG Entertainment is 1.38 times less risky than Elentec Co. The stock trades about -0.03 of its potential returns per unit of risk. The Elentec Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  512,000  in Elentec Co on September 24, 2024 and sell it today you would lose (5,000) from holding Elentec Co or give up 0.98% of portfolio value over 90 days.

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

YG Entertainment  vs.  Elentec Co

YG Entertainment

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in YG Entertainment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YG Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Elentec Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elentec Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with YG Entertainment and Elentec Co

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

The idea behind YG Entertainment and Elentec 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.