Correlation Between JYP Entertainment and Celltrion

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

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

Diversification Opportunities for JYP Entertainment and Celltrion

-0.29

Correlation Coefficient

JYP Entertainment  Celltrion

Very good diversification

The 3 months correlation between JYP and Celltrion is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and Celltrion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celltrion 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 Celltrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celltrion has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Celltrion go up and down completely randomly.

Pair Corralation between JYP Entertainment and Celltrion

Assuming the 90 days trading horizon JYP Entertainment is expected to generate 1.13 times less return on investment than Celltrion. In addition to that, JYP Entertainment is 1.3 times more volatile than Celltrion. It trades about 0.02 of its total potential returns per unit of risk. Celltrion is currently generating about 0.03 per unit of volatility. If you would invest  16,256,800  in Celltrion on September 26, 2024 and sell it today you would earn a total of  3,183,200  from holding Celltrion or generate 19.58% return on investment over 90 days.

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

JYP Entertainment  vs.  Celltrion

JYP Entertainment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment 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.

Celltrion

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind JYP Entertainment and Celltrion 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.