Correlation Between Webzen and STCube
Can any of the company-specific risk be diversified away by investing in both Webzen and STCube 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 Webzen and STCube into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webzen Inc and STCube Inc, you can compare the effects of market volatilities on Webzen and STCube 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 Webzen with a short position of STCube. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webzen and STCube.
Diversification Opportunities for Webzen and STCube
Good diversification
The 3 months correlation between Webzen and STCube is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Webzen Inc and STCube Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STCube Inc and Webzen 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 Webzen Inc are associated (or correlated) with STCube. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STCube Inc has no effect on the direction of Webzen i.e., Webzen and STCube go up and down completely randomly.
Pair Corralation between Webzen and STCube
Assuming the 90 days trading horizon Webzen Inc is expected to under-perform the STCube. But the stock apears to be less risky and, when comparing its historical volatility, Webzen Inc is 3.09 times less risky than STCube. The stock trades about -0.27 of its potential returns per unit of risk. The STCube Inc is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 621,000 in STCube Inc on September 1, 2024 and sell it today you would lose (79,000) from holding STCube Inc or give up 12.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Webzen Inc vs. STCube Inc
Performance |
| Timeline |
| Webzen Inc |
| STCube Inc |
Webzen and STCube Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webzen and STCube
The main advantage of trading using opposite Webzen and STCube positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webzen position performs unexpectedly, STCube 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 STCube will offset losses from the drop in STCube's long position.The idea behind Webzen Inc and STCube Inc 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.| STCube vs. Shinhan Inverse Copper | STCube vs. Korea Investment Holdings | STCube vs. DONGKUK TED METAL | STCube vs. Heungkuk Metaltech CoLtd |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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