Correlation Between KEYEASTCoLtd and Webzen

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

By analyzing existing cross correlation between KEYEASTCoLtd and Webzen Inc, you can compare the effects of market volatilities on KEYEASTCoLtd and Webzen 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 KEYEASTCoLtd with a short position of Webzen. Check out your portfolio center. Please also check ongoing floating volatility patterns of KEYEASTCoLtd and Webzen.

Diversification Opportunities for KEYEASTCoLtd and Webzen

0.35

Correlation Coefficient

KEYEASTCoLtd  Webzen

Weak diversification

The 3 months correlation between KEYEASTCoLtd and Webzen is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding KEYEASTCoLtd and Webzen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webzen Inc and KEYEASTCoLtd 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 KEYEASTCoLtd are associated (or correlated) with Webzen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webzen Inc has no effect on the direction of KEYEASTCoLtd i.e., KEYEASTCoLtd and Webzen go up and down completely randomly.

Pair Corralation between KEYEASTCoLtd and Webzen

Assuming the 90 days trading horizon KEYEASTCoLtd is expected to generate 2.89 times more return on investment than Webzen. However, KEYEASTCoLtd is 2.89 times more volatile than Webzen Inc. It trades about 0.19 of its potential returns per unit of risk. Webzen Inc is currently generating about 0.12 per unit of risk. If you would invest  414,000  in KEYEASTCoLtd on September 14, 2024 and sell it today you would earn a total of  71,000  from holding KEYEASTCoLtd or generate 17.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

KEYEASTCoLtd  vs.  Webzen Inc

KEYEASTCoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KEYEASTCoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KEYEASTCoLtd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Webzen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Webzen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KEYEASTCoLtd and Webzen

The main advantage of trading using opposite KEYEASTCoLtd and Webzen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEYEASTCoLtd position performs unexpectedly, Webzen 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 Webzen will offset losses from the drop in Webzen's long position.

The idea behind KEYEASTCoLtd and Webzen 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.