Correlation Between JYP Entertainment and Dongil Metal

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

Diversification Opportunities for JYP Entertainment and Dongil Metal

-0.42

Correlation Coefficient

JYP Entertainment  Dongil Metal

Very good diversification

The 3 months correlation between JYP and Dongil is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment Corp and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil Metal 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 Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Dongil Metal go up and down completely randomly.

Pair Corralation between JYP Entertainment and Dongil Metal

Assuming the 90 days trading horizon JYP Entertainment is expected to generate 3.49 times less return on investment than Dongil Metal. In addition to that, JYP Entertainment is 1.42 times more volatile than Dongil Metal Co. It trades about 0.1 of its total potential returns per unit of risk. Dongil Metal Co is currently generating about 0.51 per unit of volatility. If you would invest  751,598  in Dongil Metal Co on October 23, 2024 and sell it today you would earn a total of  168,402  from holding Dongil Metal Co or generate 22.41% 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.  Dongil Metal Co

JYP Entertainment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment Corp are ranked lower than 14 (%) 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.

Dongil Metal

Risk-Adjusted Performance

9 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dongil Metal Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongil Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with JYP Entertainment and Dongil Metal

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

The idea behind JYP Entertainment Corp and Dongil Metal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.