Correlation Between RadNet and Weibo Corp
Can any of the company-specific risk be diversified away by investing in both RadNet 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 RadNet and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RadNet Inc and Weibo Corp, you can compare the effects of market volatilities on RadNet 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 RadNet with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of RadNet and Weibo Corp.
Diversification Opportunities for RadNet and Weibo Corp
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between RadNet and Weibo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and RadNet 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 RadNet Inc 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 RadNet i.e., RadNet and Weibo Corp go up and down completely randomly.
Pair Corralation between RadNet and Weibo Corp
Given the investment horizon of 90 days RadNet Inc is expected to generate 1.45 times more return on investment than Weibo Corp. However, RadNet is 1.45 times more volatile than Weibo Corp. It trades about 0.22 of its potential returns per unit of risk. Weibo Corp is currently generating about 0.04 per unit of risk. If you would invest 6,770 in RadNet Inc on August 30, 2024 and sell it today you would earn a total of 1,479 from holding RadNet Inc or generate 21.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RadNet Inc vs. Weibo Corp
Performance |
| Timeline |
| RadNet Inc |
| Weibo Corp |
RadNet and Weibo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RadNet and Weibo Corp
The main advantage of trading using opposite RadNet and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RadNet 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 RadNet Inc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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