Correlation Between Zoom Video and WEBTOON Entertainment

Can any of the company-specific risk be diversified away by investing in both Zoom Video 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 Zoom Video and WEBTOON Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zoom Video Communications and WEBTOON Entertainment Common, you can compare the effects of market volatilities on Zoom Video 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 Zoom Video with a short position of WEBTOON Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and WEBTOON Entertainment.

Diversification Opportunities for Zoom Video and WEBTOON Entertainment

-0.68

Correlation Coefficient

Zoom Video  WEBTOON Entertainment

Excellent diversification

The 3 months correlation between Zoom and WEBTOON is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and WEBTOON Entertainment Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBTOON Entertainment and Zoom Video 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 Zoom Video Communications 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 Zoom Video i.e., Zoom Video and WEBTOON Entertainment go up and down completely randomly.

Pair Corralation between Zoom Video and WEBTOON Entertainment

Allowing for the 90-day total investment horizon Zoom Video Communications is expected to generate 0.25 times more return on investment than WEBTOON Entertainment. However, Zoom Video Communications is 3.95 times less risky than WEBTOON Entertainment. It trades about 0.03 of its potential returns per unit of risk. WEBTOON Entertainment Common is currently generating about -0.1 per unit of risk. If you would invest  6,908  in Zoom Video Communications on July 1, 2024 and sell it today you would earn a total of  47.00  from holding Zoom Video Communications or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Zoom Video Communications  vs.  WEBTOON Entertainment Common

Zoom Video Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Zoom Video displayed solid returns over the last few months and may actually be approaching a breakup point.

WEBTOON Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WEBTOON Entertainment Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in October 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Zoom Video and WEBTOON Entertainment

The main advantage of trading using opposite Zoom Video and WEBTOON Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video 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.

The idea behind Zoom Video Communications and WEBTOON Entertainment Common 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.