Correlation Between WEBTOON Entertainment and Hennessy Technology

Can any of the company-specific risk be diversified away by investing in both WEBTOON Entertainment and Hennessy Technology 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 Hennessy Technology 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 Hennessy Technology Fund, you can compare the effects of market volatilities on WEBTOON Entertainment and Hennessy Technology 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 Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEBTOON Entertainment and Hennessy Technology.

Diversification Opportunities for WEBTOON Entertainment and Hennessy Technology

0.3

Correlation Coefficient

WEBTOON Entertainment  Hennessy Technology

Weak diversification

The 3 months correlation between WEBTOON and Hennessy is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding WEBTOON Entertainment Common and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology 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 Hennessy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Technology has no effect on the direction of WEBTOON Entertainment i.e., WEBTOON Entertainment and Hennessy Technology go up and down completely randomly.

Pair Corralation between WEBTOON Entertainment and Hennessy Technology

Given the investment horizon of 90 days WEBTOON Entertainment is expected to generate 1.57 times less return on investment than Hennessy Technology. In addition to that, WEBTOON Entertainment is 3.66 times more volatile than Hennessy Technology Fund. It trades about 0.03 of its total potential returns per unit of risk. Hennessy Technology Fund is currently generating about 0.16 per unit of volatility. If you would invest  2,182  in Hennessy Technology Fund on September 5, 2024 and sell it today you would earn a total of  247.00  from holding Hennessy Technology Fund or generate 11.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

WEBTOON Entertainment Common  vs.  Hennessy Technology Fund

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.

Hennessy Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Technology Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Hennessy Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with WEBTOON Entertainment and Hennessy Technology

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

The idea behind WEBTOON Entertainment Common and Hennessy Technology Fund 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.