Correlation Between I Components and YG Entertainment

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

By analyzing existing cross correlation between i Components Co and YG Entertainment, you can compare the effects of market volatilities on I Components and YG 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 I Components with a short position of YG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Components and YG Entertainment.

Diversification Opportunities for I Components and YG Entertainment

0.25

Correlation Coefficient

I Components  YG Entertainment

Modest diversification

The 3 months correlation between 059100 and 122870 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment and I Components 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 i Components Co are associated (or correlated) with YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of I Components i.e., I Components and YG Entertainment go up and down completely randomly.

Pair Corralation between I Components and YG Entertainment

Assuming the 90 days trading horizon i Components Co is expected to generate 1.0 times more return on investment than YG Entertainment. However, i Components Co is 1.0 times less risky than YG Entertainment. It trades about 0.34 of its potential returns per unit of risk. YG Entertainment is currently generating about -0.09 per unit of risk. If you would invest  470,500  in i Components Co on October 14, 2024 and sell it today you would earn a total of  67,500  from holding i Components Co or generate 14.35% return on investment over 90 days.

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

i Components Co  vs.  YG Entertainment

i Components

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in i Components Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, I Components sustained solid returns over the last few months and may actually be approaching a breakup point.

YG Entertainment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YG Entertainment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, YG Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with I Components and YG Entertainment

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

The idea behind i Components Co and YG Entertainment 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.