Correlation Between HE Equipment and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Weibo Corp, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Weibo Corp.
Diversification Opportunities for HE Equipment and Weibo Corp
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HEES and Weibo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Weibo Corp go up and down completely randomly.
Pair Corralation between HE Equipment and Weibo Corp
Given the investment horizon of 90 days HE Equipment Services is expected to under-perform the Weibo Corp. But the stock apears to be less risky and, when comparing its historical volatility, HE Equipment Services is 1.29 times less risky than Weibo Corp. The stock trades about -0.38 of its potential returns per unit of risk. The Weibo Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 976.00 in Weibo Corp on October 1, 2024 and sell it today you would earn a total of 2.00 from holding Weibo Corp or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Weibo Corp
Performance |
| Timeline |
| HE Equipment Services |
| Weibo Corp |
HE Equipment and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Weibo Corp
The main advantage of trading using opposite HE Equipment and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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