Correlation Between JYP Entertainment and SeAH Bestee

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

By analyzing existing cross correlation between JYP Entertainment Corp and SeAH Bestee, you can compare the effects of market volatilities on JYP Entertainment and SeAH Bestee 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 SeAH Bestee. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and SeAH Bestee.

Diversification Opportunities for JYP Entertainment and SeAH Bestee

-0.25

Correlation Coefficient

JYP Entertainment  SeAH Bestee

Very good diversification

The 3 months correlation between JYP and SeAH is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and SeAH Bestee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SeAH Bestee 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 Corp are associated (or correlated) with SeAH Bestee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SeAH Bestee has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and SeAH Bestee go up and down completely randomly.

Pair Corralation between JYP Entertainment and SeAH Bestee

Assuming the 90 days trading horizon JYP Entertainment Corp is expected to under-perform the SeAH Bestee. In addition to that, JYP Entertainment is 1.55 times more volatile than SeAH Bestee. It trades about -0.06 of its total potential returns per unit of risk. SeAH Bestee is currently generating about -0.02 per unit of volatility. If you would invest  1,857,736  in SeAH Bestee on December 30, 2024 and sell it today you would lose (54,736) from holding SeAH Bestee or give up 2.95% of portfolio value over 90 days.

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

JYP Entertainment Corp  vs.  SeAH Bestee

JYP Entertainment Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days JYP Entertainment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

SeAH Bestee

Risk-Adjusted Performance

Very Weak

Over the last 90 days SeAH Bestee has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SeAH Bestee is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JYP Entertainment and SeAH Bestee

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

The idea behind JYP Entertainment Corp and SeAH Bestee 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.