Correlation Between SM Entertainment and JC Chemical
Can any of the company-specific risk be diversified away by investing in both SM Entertainment and JC Chemical 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 SM Entertainment and JC Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Entertainment Co and JC Chemical Co, you can compare the effects of market volatilities on SM Entertainment and JC Chemical 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 SM Entertainment with a short position of JC Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Entertainment and JC Chemical.
Diversification Opportunities for SM Entertainment and JC Chemical
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 041510 and 137950 is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding SM Entertainment Co and JC Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JC Chemical and SM 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 SM Entertainment Co are associated (or correlated) with JC Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JC Chemical has no effect on the direction of SM Entertainment i.e., SM Entertainment and JC Chemical go up and down completely randomly.
Pair Corralation between SM Entertainment and JC Chemical
Assuming the 90 days trading horizon SM Entertainment Co is expected to generate 1.44 times more return on investment than JC Chemical. However, SM Entertainment is 1.44 times more volatile than JC Chemical Co. It trades about 0.02 of its potential returns per unit of risk. JC Chemical Co is currently generating about -0.03 per unit of risk. If you would invest 7,341,239 in SM Entertainment Co on September 26, 2024 and sell it today you would earn a total of 238,761 from holding SM Entertainment Co or generate 3.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SM Entertainment Co vs. JC Chemical Co
Performance |
Timeline |
SM Entertainment |
JC Chemical |
SM Entertainment and JC Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SM Entertainment and JC Chemical
The main advantage of trading using opposite SM Entertainment and JC Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Entertainment position performs unexpectedly, JC Chemical 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 JC Chemical will offset losses from the drop in JC Chemical's long position.SM Entertainment vs. Samsung Electronics Co | SM Entertainment vs. Samsung Electronics Co | SM Entertainment vs. KB Financial Group | SM Entertainment vs. Shinhan Financial Group |
JC Chemical vs. SM Entertainment Co | JC Chemical vs. Dongbang Transport Logistics | JC Chemical vs. MEDIANA CoLtd | JC Chemical vs. FNC Entertainment Co |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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