Correlation Between WEBTOON Entertainment and Li Auto
Can any of the company-specific risk be diversified away by investing in both WEBTOON Entertainment and Li Auto 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 Li Auto 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 Li Auto, you can compare the effects of market volatilities on WEBTOON Entertainment and Li Auto 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 Li Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEBTOON Entertainment and Li Auto.
Diversification Opportunities for WEBTOON Entertainment and Li Auto
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WEBTOON and Li Auto is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding WEBTOON Entertainment Common and Li Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Auto 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 Li Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Auto has no effect on the direction of WEBTOON Entertainment i.e., WEBTOON Entertainment and Li Auto go up and down completely randomly.
Pair Corralation between WEBTOON Entertainment and Li Auto
Given the investment horizon of 90 days WEBTOON Entertainment Common is expected to generate 1.21 times more return on investment than Li Auto. However, WEBTOON Entertainment is 1.21 times more volatile than Li Auto. It trades about 0.21 of its potential returns per unit of risk. Li Auto is currently generating about -0.06 per unit of risk. If you would invest 1,040 in WEBTOON Entertainment Common on September 1, 2024 and sell it today you would earn a total of 188.00 from holding WEBTOON Entertainment Common or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEBTOON Entertainment Common vs. Li Auto
Performance |
| Timeline |
| WEBTOON Entertainment |
| Li Auto |
WEBTOON Entertainment and Li Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEBTOON Entertainment and Li Auto
The main advantage of trading using opposite WEBTOON Entertainment and Li Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEBTOON Entertainment position performs unexpectedly, Li Auto 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 Li Auto will offset losses from the drop in Li Auto's long position.The idea behind WEBTOON Entertainment Common and Li Auto 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.
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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