Correlation Between Sungdo Engineering and JYP Entertainment

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

By analyzing existing cross correlation between Sungdo Engineering Construction and JYP Entertainment Corp, you can compare the effects of market volatilities on Sungdo Engineering and JYP Entertainment 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 Sungdo Engineering with a short position of JYP Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sungdo Engineering and JYP Entertainment.

Diversification Opportunities for Sungdo Engineering and JYP Entertainment

-0.48

Correlation Coefficient

Sungdo Engineering  JYP Entertainment

Very good diversification

The 3 months correlation between Sungdo and JYP is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sungdo Engineering Constructio and JYP Entertainment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JYP Entertainment Corp and Sungdo Engineering 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 Sungdo Engineering Construction are associated (or correlated) with JYP Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JYP Entertainment Corp has no effect on the direction of Sungdo Engineering i.e., Sungdo Engineering and JYP Entertainment go up and down completely randomly.

Pair Corralation between Sungdo Engineering and JYP Entertainment

Assuming the 90 days trading horizon Sungdo Engineering is expected to generate 7.84 times less return on investment than JYP Entertainment. In addition to that, Sungdo Engineering is 1.05 times more volatile than JYP Entertainment Corp. It trades about 0.03 of its total potential returns per unit of risk. JYP Entertainment Corp is currently generating about 0.25 per unit of volatility. If you would invest  7,500,000  in JYP Entertainment Corp on December 2, 2024 and sell it today you would earn a total of  930,000  from holding JYP Entertainment Corp or generate 12.4% return on investment over 90 days.

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

Sungdo Engineering Constructio  vs.  JYP Entertainment Corp

Sungdo Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sungdo Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sungdo Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JYP Entertainment Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JYP Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sungdo Engineering and JYP Entertainment

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

The idea behind Sungdo Engineering Construction and JYP Entertainment 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.