Correlation Between Highway Holdings and WEBTOON Entertainment
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and WEBTOON Entertainment 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 Highway Holdings and WEBTOON Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway Holdings Limited and WEBTOON Entertainment Common, you can compare the effects of market volatilities on Highway Holdings and WEBTOON Entertainment 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 Highway Holdings with a short position of WEBTOON Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and WEBTOON Entertainment.
Diversification Opportunities for Highway Holdings and WEBTOON Entertainment
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Highway and WEBTOON is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and WEBTOON Entertainment Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBTOON Entertainment and Highway Holdings 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 Highway Holdings Limited are associated (or correlated) with WEBTOON Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEBTOON Entertainment has no effect on the direction of Highway Holdings i.e., Highway Holdings and WEBTOON Entertainment go up and down completely randomly.
Pair Corralation between Highway Holdings and WEBTOON Entertainment
Given the investment horizon of 90 days Highway Holdings is expected to generate 3.28 times less return on investment than WEBTOON Entertainment. But when comparing it to its historical volatility, Highway Holdings Limited is 3.42 times less risky than WEBTOON Entertainment. It trades about 0.16 of its potential returns per unit of risk. WEBTOON Entertainment Common is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,104 in WEBTOON Entertainment Common on September 3, 2024 and sell it today you would earn a total of 124.00 from holding WEBTOON Entertainment Common or generate 11.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. WEBTOON Entertainment Common
Performance |
| Timeline |
| Highway Holdings |
| WEBTOON Entertainment |
Highway Holdings and WEBTOON Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and WEBTOON Entertainment
The main advantage of trading using opposite Highway Holdings and WEBTOON Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, WEBTOON Entertainment 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 WEBTOON Entertainment will offset losses from the drop in WEBTOON Entertainment's long position.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
| WEBTOON Entertainment vs. Anterix | WEBTOON Entertainment vs. Radcom | WEBTOON Entertainment vs. Reservoir Media | WEBTOON Entertainment vs. Kandi Technologies Group |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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