Correlation Between Eastman Chemical and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and Weibo Corp 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 Eastman Chemical and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Weibo Corp, you can compare the effects of market volatilities on Eastman Chemical and Weibo Corp 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 Eastman Chemical with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Weibo Corp.
Diversification Opportunities for Eastman Chemical and Weibo Corp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastman and Weibo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Eastman Chemical 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 Eastman Chemical are associated (or correlated) with Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Weibo Corp go up and down completely randomly.
Pair Corralation between Eastman Chemical and Weibo Corp
Considering the 90-day investment horizon Eastman Chemical is expected to generate 0.5 times more return on investment than Weibo Corp. However, Eastman Chemical is 1.99 times less risky than Weibo Corp. It trades about 0.04 of its potential returns per unit of risk. Weibo Corp is currently generating about -0.02 per unit of risk. If you would invest 8,193 in Eastman Chemical on September 3, 2024 and sell it today you would earn a total of 2,279 from holding Eastman Chemical or generate 27.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Weibo Corp
Performance |
| Timeline |
| Eastman Chemical |
| Weibo Corp |
Eastman Chemical and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Weibo Corp
The main advantage of trading using opposite Eastman Chemical and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, Weibo Corp 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 Weibo Corp will offset losses from the drop in Weibo Corp's long position.| Eastman Chemical vs. SPACE | Eastman Chemical vs. Bayview Acquisition Corp | Eastman Chemical vs. T Rowe Price | Eastman Chemical vs. Ampleforth |
| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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