Correlation Between JYP Entertainment and SK Holdings

Can any of the company-specific risk be diversified away by investing in both JYP Entertainment and SK Holdings 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 SK Holdings 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 SK Holdings Co, you can compare the effects of market volatilities on JYP Entertainment and SK Holdings 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 SK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of JYP Entertainment and SK Holdings.

Diversification Opportunities for JYP Entertainment and SK Holdings

-0.46

Correlation Coefficient

JYP Entertainment  SK Holdings

Very good diversification

The 3 months correlation between JYP and 034730 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings 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 SK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and SK Holdings go up and down completely randomly.

Pair Corralation between JYP Entertainment and SK Holdings

Assuming the 90 days trading horizon JYP Entertainment is expected to generate 1.17 times less return on investment than SK Holdings. In addition to that, JYP Entertainment is 1.46 times more volatile than SK Holdings Co. It trades about 0.11 of its total potential returns per unit of risk. SK Holdings Co is currently generating about 0.18 per unit of volatility. If you would invest  13,680,000  in SK Holdings Co on October 20, 2024 and sell it today you would earn a total of  1,000,000  from holding SK Holdings Co or generate 7.31% return on investment over 90 days.

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

JYP Entertainment Corp  vs.  SK Holdings Co

JYP Entertainment Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JYP Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

SK Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SK Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SK Holdings 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 SK Holdings

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

The idea behind JYP Entertainment Corp and SK Holdings 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.