Correlation Between Hurum and JYP Entertainment

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

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

Diversification Opportunities for Hurum and JYP Entertainment

-0.86

Correlation Coefficient

Hurum  JYP Entertainment

Pay attention - limited upside

The 3 months correlation between Hurum and JYP is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hurum Co and JYP Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JYP Entertainment and Hurum 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 Hurum Co are associated (or correlated) with JYP Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JYP Entertainment has no effect on the direction of Hurum i.e., Hurum and JYP Entertainment go up and down completely randomly.

Pair Corralation between Hurum and JYP Entertainment

Assuming the 90 days trading horizon Hurum Co is expected to generate 0.74 times more return on investment than JYP Entertainment. However, Hurum Co is 1.35 times less risky than JYP Entertainment. It trades about 0.36 of its potential returns per unit of risk. JYP Entertainment is currently generating about 0.03 per unit of risk. If you would invest  64,700  in Hurum Co on October 9, 2024 and sell it today you would earn a total of  9,200  from holding Hurum Co or generate 14.22% return on investment over 90 days.

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

Hurum Co  vs.  JYP Entertainment

Hurum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurum Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

JYP Entertainment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JYP Entertainment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JYP Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hurum and JYP Entertainment

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

The idea behind Hurum Co and JYP 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.