Correlation Between YG Entertainment and I-Components

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

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

Diversification Opportunities for YG Entertainment and I-Components

0.32

Correlation Coefficient

YG Entertainment  I-Components

Weak diversification

The 3 months correlation between 122870 and I-Components is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding YG Entertainment and i Components Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i Components and YG 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 YG Entertainment are associated (or correlated) with I-Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i Components has no effect on the direction of YG Entertainment i.e., YG Entertainment and I-Components go up and down completely randomly.

Pair Corralation between YG Entertainment and I-Components

Assuming the 90 days trading horizon YG Entertainment is expected to generate 1.07 times more return on investment than I-Components. However, YG Entertainment is 1.07 times more volatile than i Components Co. It trades about 0.01 of its potential returns per unit of risk. i Components Co is currently generating about -0.02 per unit of risk. If you would invest  4,885,376  in YG Entertainment on September 26, 2024 and sell it today you would lose (400,376) from holding YG Entertainment or give up 8.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

YG Entertainment  vs.  i Components Co

YG Entertainment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YG Entertainment are ranked lower than 11 (%) 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.

i Components

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with YG Entertainment and I-Components

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

The idea behind YG Entertainment and i Components 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.