Correlation Between Lucid and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both Lucid 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 Lucid and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucid Group and Weibo Corp, you can compare the effects of market volatilities on Lucid 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 Lucid with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucid and Weibo Corp.
Diversification Opportunities for Lucid and Weibo Corp
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lucid and Weibo is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lucid Group and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Lucid 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 Lucid Group 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 Lucid i.e., Lucid and Weibo Corp go up and down completely randomly.
Pair Corralation between Lucid and Weibo Corp
Given the investment horizon of 90 days Lucid Group is expected to under-perform the Weibo Corp. In addition to that, Lucid is 1.6 times more volatile than Weibo Corp. It trades about -0.03 of its total potential returns per unit of risk. Weibo Corp is currently generating about -0.01 per unit of volatility. If you would invest 1,572 in Weibo Corp on September 5, 2024 and sell it today you would lose (582.00) from holding Weibo Corp or give up 37.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucid Group vs. Weibo Corp
Performance |
| Timeline |
| Lucid Group |
| Weibo Corp |
Lucid and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucid and Weibo Corp
The main advantage of trading using opposite Lucid and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucid 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.The idea behind Lucid Group and Weibo Corp 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.| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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