Correlation Between Next Entertainment and Sk Biopharmaceutica

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

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

Diversification Opportunities for Next Entertainment and Sk Biopharmaceutica

0.48

Correlation Coefficient

Next Entertainment  Sk Biopharmaceutica

Very weak diversification

The 3 months correlation between Next and 326030 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Next Entertainment World and Sk Biopharmaceuticals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sk Biopharmaceuticals and Next 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 Next Entertainment World are associated (or correlated) with Sk Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sk Biopharmaceuticals has no effect on the direction of Next Entertainment i.e., Next Entertainment and Sk Biopharmaceutica go up and down completely randomly.

Pair Corralation between Next Entertainment and Sk Biopharmaceutica

Assuming the 90 days trading horizon Next Entertainment World is expected to under-perform the Sk Biopharmaceutica. In addition to that, Next Entertainment is 1.03 times more volatile than Sk Biopharmaceuticals Co. It trades about -0.07 of its total potential returns per unit of risk. Sk Biopharmaceuticals Co is currently generating about 0.05 per unit of volatility. If you would invest  10,940,000  in Sk Biopharmaceuticals Co on October 10, 2024 and sell it today you would earn a total of  690,000  from holding Sk Biopharmaceuticals Co or generate 6.31% return on investment over 90 days.

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

Next Entertainment World  vs.  Sk Biopharmaceuticals Co

Next Entertainment World

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Next Entertainment World has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sk Biopharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sk Biopharmaceuticals Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sk Biopharmaceutica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Next Entertainment and Sk Biopharmaceutica

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

The idea behind Next Entertainment World and Sk Biopharmaceuticals 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..