Correlation Between WEBTOON Entertainment and VHAI

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

Diversification Opportunities for WEBTOON Entertainment and VHAI

0.58

Correlation Coefficient

WEBTOON Entertainment  VHAI

Very weak diversification

The 3 months correlation between WEBTOON and VHAI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding WEBTOON Entertainment Common and VHAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VHAI 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 VHAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VHAI has no effect on the direction of WEBTOON Entertainment i.e., WEBTOON Entertainment and VHAI go up and down completely randomly.

Pair Corralation between WEBTOON Entertainment and VHAI

Given the investment horizon of 90 days WEBTOON Entertainment Common is expected to generate 0.3 times more return on investment than VHAI. However, WEBTOON Entertainment Common is 3.34 times less risky than VHAI. It trades about 0.02 of its potential returns per unit of risk. VHAI is currently generating about -0.16 per unit of risk. If you would invest  1,243  in WEBTOON Entertainment Common on September 2, 2024 and sell it today you would lose (15.00) from holding WEBTOON Entertainment Common or give up 1.21% of portfolio value over 90 days.

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

WEBTOON Entertainment Common  vs.  VHAI

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 latest stock price disarray, may contribute to short-term losses for the investors.

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with WEBTOON Entertainment and VHAI

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

The idea behind WEBTOON Entertainment Common and VHAI 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 Transaction History module to view history of all your transactions and understand their impact on performance.