Correlation Between BANCO and WEBTOON Entertainment

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

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

Diversification Opportunities for BANCO and WEBTOON Entertainment

-0.35

Correlation Coefficient

BANCO  WEBTOON Entertainment

Very good diversification

The 3 months correlation between BANCO and WEBTOON is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BANCO SANTANDER S and WEBTOON Entertainment Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBTOON Entertainment and BANCO 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 BANCO SANTANDER S 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 BANCO i.e., BANCO and WEBTOON Entertainment go up and down completely randomly.

Pair Corralation between BANCO and WEBTOON Entertainment

Assuming the 90 days trading horizon BANCO SANTANDER S is expected to under-perform the WEBTOON Entertainment. But the bond apears to be less risky and, when comparing its historical volatility, BANCO SANTANDER S is 2.42 times less risky than WEBTOON Entertainment. The bond trades about -0.09 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  1,351  in WEBTOON Entertainment Common on October 12, 2024 and sell it today you would lose (26.00) from holding WEBTOON Entertainment Common or give up 1.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

BANCO SANTANDER S  vs.  WEBTOON Entertainment Common

BANCO SANTANDER S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANCO SANTANDER S has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BANCO is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

WEBTOON Entertainment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WEBTOON Entertainment Common are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, WEBTOON Entertainment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANCO and WEBTOON Entertainment

The main advantage of trading using opposite BANCO and WEBTOON Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANCO 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 BANCO SANTANDER S 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.