Correlation Between JYP Entertainment and Synopex

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

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

Diversification Opportunities for JYP Entertainment and Synopex

-0.65

Correlation Coefficient

JYP Entertainment  Synopex

Excellent diversification

The 3 months correlation between JYP and Synopex is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and Synopex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synopex 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 are associated (or correlated) with Synopex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synopex has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Synopex go up and down completely randomly.

Pair Corralation between JYP Entertainment and Synopex

Assuming the 90 days trading horizon JYP Entertainment is expected to under-perform the Synopex. But the stock apears to be less risky and, when comparing its historical volatility, JYP Entertainment is 1.25 times less risky than Synopex. The stock trades about -0.05 of its potential returns per unit of risk. The Synopex is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  629,000  in Synopex on September 28, 2024 and sell it today you would earn a total of  71,000  from holding Synopex or generate 11.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

JYP Entertainment  vs.  Synopex

JYP Entertainment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment are ranked lower than 15 (%) 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.

Synopex

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind JYP Entertainment and Synopex 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.