Correlation Between Mitsubishi UFJ and WEBTOON Entertainment

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

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

Diversification Opportunities for Mitsubishi UFJ and WEBTOON Entertainment

-0.32

Correlation Coefficient

Mitsubishi UFJ  WEBTOON Entertainment

Very good diversification

The 3 months correlation between Mitsubishi and WEBTOON is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi UFJ Lease and WEBTOON Entertainment Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBTOON Entertainment and Mitsubishi UFJ 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 Mitsubishi UFJ Lease 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 Mitsubishi UFJ i.e., Mitsubishi UFJ and WEBTOON Entertainment go up and down completely randomly.

Pair Corralation between Mitsubishi UFJ and WEBTOON Entertainment

Assuming the 90 days horizon Mitsubishi UFJ Lease is expected to under-perform the WEBTOON Entertainment. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mitsubishi UFJ Lease is 1.3 times less risky than WEBTOON Entertainment. The pink sheet trades about -0.06 of its potential returns per unit of risk. The WEBTOON Entertainment Common is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,227  in WEBTOON Entertainment Common on September 5, 2024 and sell it today you would earn a total of  22.00  from holding WEBTOON Entertainment Common or generate 1.79% return on investment over 90 days.

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

Mitsubishi UFJ Lease  vs.  WEBTOON Entertainment Common

Mitsubishi UFJ Lease

Risk-Adjusted Performance

0 of 100

Very Weak

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

WEBTOON Entertainment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WEBTOON Entertainment Common are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, WEBTOON Entertainment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mitsubishi UFJ and WEBTOON Entertainment

The main advantage of trading using opposite Mitsubishi UFJ and WEBTOON Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi UFJ 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 Mitsubishi UFJ Lease 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.