Correlation Between WEBTOON Entertainment and Outbrain

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

Diversification Opportunities for WEBTOON Entertainment and Outbrain

0.84

Correlation Coefficient

WEBTOON Entertainment  Outbrain

Very poor diversification

The 3 months correlation between WEBTOON and Outbrain is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding WEBTOON Entertainment Common and Outbrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outbrain 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 Outbrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outbrain has no effect on the direction of WEBTOON Entertainment i.e., WEBTOON Entertainment and Outbrain go up and down completely randomly.

Pair Corralation between WEBTOON Entertainment and Outbrain

Given the investment horizon of 90 days WEBTOON Entertainment Common is expected to under-perform the Outbrain. In addition to that, WEBTOON Entertainment is 2.0 times more volatile than Outbrain. It trades about -0.05 of its total potential returns per unit of risk. Outbrain is currently generating about 0.13 per unit of volatility. If you would invest  498.00  in Outbrain on September 26, 2024 and sell it today you would earn a total of  240.00  from holding Outbrain or generate 48.19% return on investment over 90 days.

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

WEBTOON Entertainment Common  vs.  Outbrain

WEBTOON Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WEBTOON Entertainment Common are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, WEBTOON Entertainment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Outbrain

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Outbrain sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WEBTOON Entertainment and Outbrain

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

The idea behind WEBTOON Entertainment Common and Outbrain 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.