Correlation Between SKONEC Entertainment and Insung Information

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

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

Diversification Opportunities for SKONEC Entertainment and Insung Information

0.27

Correlation Coefficient

SKONEC Entertainment  Insung Information

Modest diversification

The 3 months correlation between SKONEC and Insung is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SKONEC Entertainment Co and Insung Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insung Information and SKONEC 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 SKONEC Entertainment Co are associated (or correlated) with Insung Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insung Information has no effect on the direction of SKONEC Entertainment i.e., SKONEC Entertainment and Insung Information go up and down completely randomly.

Pair Corralation between SKONEC Entertainment and Insung Information

Assuming the 90 days trading horizon SKONEC Entertainment Co is expected to under-perform the Insung Information. But the stock apears to be less risky and, when comparing its historical volatility, SKONEC Entertainment Co is 1.28 times less risky than Insung Information. The stock trades about -0.04 of its potential returns per unit of risk. The Insung Information Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  220,669  in Insung Information Co on December 8, 2024 and sell it today you would lose (44,869) from holding Insung Information Co or give up 20.33% of portfolio value over 90 days.

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

SKONEC Entertainment Co  vs.  Insung Information Co

SKONEC Entertainment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SKONEC Entertainment Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SKONEC Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Insung Information

Risk-Adjusted Performance

Modest

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

Pair Trading with SKONEC Entertainment and Insung Information

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

The idea behind SKONEC Entertainment Co and Insung Information 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.