Correlation Between WEBTOON Entertainment and Scandinavian Tobacco

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

Diversification Opportunities for WEBTOON Entertainment and Scandinavian Tobacco

-0.67

Correlation Coefficient

WEBTOON Entertainment  Scandinavian Tobacco

Excellent diversification

The 3 months correlation between WEBTOON and Scandinavian is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding WEBTOON Entertainment Common and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of WEBTOON Entertainment i.e., WEBTOON Entertainment and Scandinavian Tobacco go up and down completely randomly.

Pair Corralation between WEBTOON Entertainment and Scandinavian Tobacco

Given the investment horizon of 90 days WEBTOON Entertainment Common is expected to under-perform the Scandinavian Tobacco. In addition to that, WEBTOON Entertainment is 3.21 times more volatile than Scandinavian Tobacco Group. It trades about -0.04 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.02 per unit of volatility. If you would invest  608.00  in Scandinavian Tobacco Group on October 4, 2024 and sell it today you would earn a total of  76.00  from holding Scandinavian Tobacco Group or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	26.36%
Values	Daily Returns

WEBTOON Entertainment Common  vs.  Scandinavian Tobacco Group

WEBTOON Entertainment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WEBTOON Entertainment Common are ranked lower than 8 (%) 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.

Scandinavian Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Tobacco Group 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 Scandinavian Tobacco

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

The idea behind WEBTOON Entertainment Common and Scandinavian Tobacco Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.