Correlation Between WEBTOON Entertainment and Alger Small

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

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

Diversification Opportunities for WEBTOON Entertainment and Alger Small

0.07

Correlation Coefficient

WEBTOON Entertainment  Alger Small

Significant diversification

The 3 months correlation between WEBTOON and Alger is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding WEBTOON Entertainment Common and Alger Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Small Cap and WEBTOON Entertainment 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 WEBTOON Entertainment Common are associated (or correlated) with Alger Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Small Cap has no effect on the direction of WEBTOON Entertainment i.e., WEBTOON Entertainment and Alger Small go up and down completely randomly.

Pair Corralation between WEBTOON Entertainment and Alger Small

Given the investment horizon of 90 days WEBTOON Entertainment is expected to generate 4.98 times less return on investment than Alger Small. In addition to that, WEBTOON Entertainment is 3.0 times more volatile than Alger Small Cap. It trades about 0.02 of its total potential returns per unit of risk. Alger Small Cap is currently generating about 0.24 per unit of volatility. If you would invest  1,714  in Alger Small Cap on September 3, 2024 and sell it today you would earn a total of  384.00  from holding Alger Small Cap or generate 22.4% return on investment over 90 days.

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

WEBTOON Entertainment Common  vs.  Alger Small Cap

WEBTOON Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WEBTOON Entertainment Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, WEBTOON Entertainment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Alger Small Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Small Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WEBTOON Entertainment and Alger Small

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

The idea behind WEBTOON Entertainment Common and Alger Small Cap 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.