Correlation Between WEBTOON Entertainment and Senmiao Technology
Can any of the company-specific risk be diversified away by investing in both WEBTOON Entertainment and Senmiao Technology 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 Senmiao Technology 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 Senmiao Technology, you can compare the effects of market volatilities on WEBTOON Entertainment and Senmiao Technology 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 Senmiao Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEBTOON Entertainment and Senmiao Technology.
Diversification Opportunities for WEBTOON Entertainment and Senmiao Technology
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WEBTOON and Senmiao is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding WEBTOON Entertainment Common and Senmiao Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senmiao Technology 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 Senmiao Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senmiao Technology has no effect on the direction of WEBTOON Entertainment i.e., WEBTOON Entertainment and Senmiao Technology go up and down completely randomly.
Pair Corralation between WEBTOON Entertainment and Senmiao Technology
Given the investment horizon of 90 days WEBTOON Entertainment Common is expected to under-perform the Senmiao Technology. But the stock apears to be less risky and, when comparing its historical volatility, WEBTOON Entertainment Common is 1.06 times less risky than Senmiao Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Senmiao Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 92.00 in Senmiao Technology on August 26, 2024 and sell it today you would earn a total of 1.00 from holding Senmiao Technology or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 26.9% |
| Values | Daily Returns |
WEBTOON Entertainment Common vs. Senmiao Technology
Performance |
| Timeline |
| WEBTOON Entertainment |
| Senmiao Technology |
WEBTOON Entertainment and Senmiao Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEBTOON Entertainment and Senmiao Technology
The main advantage of trading using opposite WEBTOON Entertainment and Senmiao Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEBTOON Entertainment position performs unexpectedly, Senmiao Technology 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 Senmiao Technology will offset losses from the drop in Senmiao Technology's long position.| WEBTOON Entertainment vs. East Africa Metals | WEBTOON Entertainment vs. Cumberland Pharmaceuticals | WEBTOON Entertainment vs. Summit Materials | WEBTOON Entertainment vs. Barrick Gold Corp |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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