Correlation Between Analog Devices and WEBTOON Entertainment

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

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

Diversification Opportunities for Analog Devices and WEBTOON Entertainment

-0.42

Correlation Coefficient

Analog Devices  WEBTOON Entertainment

Very good diversification

The 3 months correlation between Analog and WEBTOON is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and WEBTOON Entertainment Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBTOON Entertainment and Analog Devices 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 Analog Devices are associated (or correlated) with WEBTOON Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEBTOON Entertainment has no effect on the direction of Analog Devices i.e., Analog Devices and WEBTOON Entertainment go up and down completely randomly.

Pair Corralation between Analog Devices and WEBTOON Entertainment

Considering the 90-day investment horizon Analog Devices is expected to generate 0.58 times more return on investment than WEBTOON Entertainment. However, Analog Devices is 1.73 times less risky than WEBTOON Entertainment. It trades about 0.04 of its potential returns per unit of risk. WEBTOON Entertainment Common is currently generating about -0.13 per unit of risk. If you would invest  22,218  in Analog Devices on December 2, 2024 and sell it today you would earn a total of  788.00  from holding Analog Devices or generate 3.55% return on investment over 90 days.

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

Analog Devices  vs.  WEBTOON Entertainment Common

Analog Devices

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

WEBTOON Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days WEBTOON Entertainment Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Analog Devices and WEBTOON Entertainment

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

The idea behind Analog Devices and WEBTOON Entertainment Common 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.