Correlation Between JYP Entertainment and ISU Abxis

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

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

Diversification Opportunities for JYP Entertainment and ISU Abxis

-0.05

Correlation Coefficient

JYP Entertainment  ISU Abxis

Good diversification

The 3 months correlation between JYP and ISU is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and ISU Abxis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Abxis 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 ISU Abxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Abxis has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and ISU Abxis go up and down completely randomly.

Pair Corralation between JYP Entertainment and ISU Abxis

Assuming the 90 days trading horizon JYP Entertainment is expected to under-perform the ISU Abxis. But the stock apears to be less risky and, when comparing its historical volatility, JYP Entertainment is 1.03 times less risky than ISU Abxis. The stock trades about -0.05 of its potential returns per unit of risk. The ISU Abxis Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  445,000  in ISU Abxis Co on December 28, 2024 and sell it today you would earn a total of  59,000  from holding ISU Abxis Co or generate 13.26% 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.  ISU Abxis Co

JYP Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days JYP Entertainment 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.

ISU Abxis

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ISU Abxis Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ISU Abxis sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JYP Entertainment and ISU Abxis

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

The idea behind JYP Entertainment and ISU Abxis 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 Valuation module to check real value of public entities based on technical and fundamental data.