Correlation Between Taegu Broadcasting and YG Entertainment

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

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

Diversification Opportunities for Taegu Broadcasting and YG Entertainment

-0.02

Correlation Coefficient

Taegu Broadcasting  YG Entertainment

Good diversification

The 3 months correlation between Taegu and 122870 is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Taegu Broadcasting and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment and Taegu Broadcasting 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 Taegu Broadcasting are associated (or correlated) with YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of Taegu Broadcasting i.e., Taegu Broadcasting and YG Entertainment go up and down completely randomly.

Pair Corralation between Taegu Broadcasting and YG Entertainment

Assuming the 90 days trading horizon Taegu Broadcasting is expected to generate 1.13 times more return on investment than YG Entertainment. However, Taegu Broadcasting is 1.13 times more volatile than YG Entertainment. It trades about 0.21 of its potential returns per unit of risk. YG Entertainment is currently generating about 0.12 per unit of risk. If you would invest  83,337  in Taegu Broadcasting on October 20, 2024 and sell it today you would earn a total of  8,263  from holding Taegu Broadcasting or generate 9.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Taegu Broadcasting  vs.  YG Entertainment

Taegu Broadcasting

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Taegu Broadcasting are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taegu Broadcasting may actually be approaching a critical reversion point that can send shares even higher in February 2025.

YG Entertainment

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days YG Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, YG Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taegu Broadcasting and YG Entertainment

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

The idea behind Taegu Broadcasting and YG Entertainment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.