Correlation Between GEN Restaurant and WEBTOON Entertainment

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

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

Diversification Opportunities for GEN Restaurant and WEBTOON Entertainment

-0.36

Correlation Coefficient

GEN Restaurant  WEBTOON Entertainment

Very good diversification

The 3 months correlation between GEN and WEBTOON is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GEN Restaurant Group, and WEBTOON Entertainment Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBTOON Entertainment and GEN Restaurant 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 GEN Restaurant Group, 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 GEN Restaurant i.e., GEN Restaurant and WEBTOON Entertainment go up and down completely randomly.

Pair Corralation between GEN Restaurant and WEBTOON Entertainment

Given the investment horizon of 90 days GEN Restaurant Group, is expected to under-perform the WEBTOON Entertainment. In addition to that, GEN Restaurant is 1.06 times more volatile than WEBTOON Entertainment Common. It trades about -0.02 of its total potential returns per unit of risk. WEBTOON Entertainment Common is currently generating about 0.06 per unit of volatility. If you would invest  1,220  in WEBTOON Entertainment Common on September 26, 2024 and sell it today you would earn a total of  122.00  from holding WEBTOON Entertainment Common or generate 10.0% return on investment over 90 days.

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

GEN Restaurant Group,  vs.  WEBTOON Entertainment Common

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

WEBTOON Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WEBTOON Entertainment Common are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, WEBTOON Entertainment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEN Restaurant and WEBTOON Entertainment

The main advantage of trading using opposite GEN Restaurant and WEBTOON Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEN Restaurant 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 GEN Restaurant Group, 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.