Correlation Between JYP Entertainment and Asia Technology

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

Diversification Opportunities for JYP Entertainment and Asia Technology

0.04

Correlation Coefficient

JYP Entertainment  Asia Technology

Significant diversification

The 3 months correlation between JYP and Asia is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and Asia Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Technology 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 Asia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Technology has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Asia Technology go up and down completely randomly.

Pair Corralation between JYP Entertainment and Asia Technology

Assuming the 90 days trading horizon JYP Entertainment Corp is expected to under-perform the Asia Technology. In addition to that, JYP Entertainment is 2.97 times more volatile than Asia Technology Co. It trades about -0.07 of its total potential returns per unit of risk. Asia Technology Co is currently generating about -0.11 per unit of volatility. If you would invest  210,000  in Asia Technology Co on December 22, 2024 and sell it today you would lose (13,500) from holding Asia Technology Co or give up 6.43% of portfolio value over 90 days.

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

JYP Entertainment Corp  vs.  Asia Technology Co

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.

Asia Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Technology Co 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.

Pair Trading with JYP Entertainment and Asia Technology

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

The idea behind JYP Entertainment Corp and Asia Technology 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.