Correlation Between HMM and Webzen
Can any of the company-specific risk be diversified away by investing in both HMM and Webzen 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 HMM and Webzen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMM Co and Webzen Inc, you can compare the effects of market volatilities on HMM and Webzen 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 HMM with a short position of Webzen. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMM and Webzen.
Diversification Opportunities for HMM and Webzen
Very good diversification
The 3 months correlation between HMM and Webzen is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding HMM Co and Webzen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webzen Inc and HMM 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 HMM Co are associated (or correlated) with Webzen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webzen Inc has no effect on the direction of HMM i.e., HMM and Webzen go up and down completely randomly.
Pair Corralation between HMM and Webzen
Assuming the 90 days trading horizon HMM Co is expected to generate 1.42 times more return on investment than Webzen. However, HMM is 1.42 times more volatile than Webzen Inc. It trades about 0.12 of its potential returns per unit of risk. Webzen Inc is currently generating about -0.17 per unit of risk. If you would invest 1,729,000 in HMM Co on August 29, 2024 and sell it today you would earn a total of 121,000 from holding HMM Co or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
HMM Co vs. Webzen Inc
Performance |
| Timeline |
| HMM Co |
| Webzen Inc |
HMM and Webzen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMM and Webzen
The main advantage of trading using opposite HMM and Webzen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMM position performs unexpectedly, Webzen 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 Webzen will offset losses from the drop in Webzen's long position.| HMM vs. BNK Financial Group | HMM vs. DB Financial Investment | HMM vs. Jinro Distillers Co | HMM vs. Lotte Data Communication |
Check out your portfolio center.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.
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