Correlation Between JYP Entertainment and Narae Nanotech

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

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

Diversification Opportunities for JYP Entertainment and Narae Nanotech

-0.37

Correlation Coefficient

JYP Entertainment  Narae Nanotech

Very good diversification

The 3 months correlation between JYP and Narae is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding JYP Entertainment and Narae Nanotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Narae Nanotech Corp 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 Narae Nanotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Narae Nanotech Corp has no effect on the direction of JYP Entertainment i.e., JYP Entertainment and Narae Nanotech go up and down completely randomly.

Pair Corralation between JYP Entertainment and Narae Nanotech

Assuming the 90 days trading horizon JYP Entertainment is expected to generate 5.2 times less return on investment than Narae Nanotech. In addition to that, JYP Entertainment is 1.03 times more volatile than Narae Nanotech Corp. It trades about 0.1 of its total potential returns per unit of risk. Narae Nanotech Corp is currently generating about 0.52 per unit of volatility. If you would invest  296,500  in Narae Nanotech Corp on September 23, 2024 and sell it today you would earn a total of  121,000  from holding Narae Nanotech Corp or generate 40.81% 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.  Narae Nanotech Corp

JYP Entertainment

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment are ranked lower than 18 (%) 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.

Narae Nanotech Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Narae Nanotech Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Narae Nanotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JYP Entertainment and Narae Nanotech

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

The idea behind JYP Entertainment and Narae Nanotech Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.