Correlation Between WEBTOON Entertainment and Mitsubishi UFJ

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

Diversification Opportunities for WEBTOON Entertainment and Mitsubishi UFJ

-0.32

Correlation Coefficient

WEBTOON Entertainment  Mitsubishi UFJ

Very good diversification

The 3 months correlation between WEBTOON and Mitsubishi is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding WEBTOON Entertainment Common and Mitsubishi UFJ Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Lease 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 Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Lease has no effect on the direction of WEBTOON Entertainment i.e., WEBTOON Entertainment and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between WEBTOON Entertainment and Mitsubishi UFJ

Given the investment horizon of 90 days WEBTOON Entertainment Common is expected to generate 1.0 times more return on investment than Mitsubishi UFJ. However, WEBTOON Entertainment is 1.0 times more volatile than Mitsubishi UFJ Lease. It trades about 0.16 of its potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about -0.03 per unit of risk. If you would invest  1,104  in WEBTOON Entertainment Common on September 5, 2024 and sell it today you would earn a total of  145.00  from holding WEBTOON Entertainment Common or generate 13.13% return on investment over 90 days.

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

WEBTOON Entertainment Common  vs.  Mitsubishi UFJ Lease

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.

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.

Pair Trading with WEBTOON Entertainment and Mitsubishi UFJ

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

The idea behind WEBTOON Entertainment Common and Mitsubishi UFJ Lease 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.