Correlation Between Weibo Corp and Arkema SA
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Arkema SA 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 Weibo Corp and Arkema SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Arkema SA, you can compare the effects of market volatilities on Weibo Corp and Arkema SA 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 Weibo Corp with a short position of Arkema SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Arkema SA.
Diversification Opportunities for Weibo Corp and Arkema SA
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weibo and Arkema is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and Weibo Corp 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 Weibo Corp are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of Weibo Corp i.e., Weibo Corp and Arkema SA go up and down completely randomly.
Pair Corralation between Weibo Corp and Arkema SA
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 2.64 times more return on investment than Arkema SA. However, Weibo Corp is 2.64 times more volatile than Arkema SA. It trades about 0.03 of its potential returns per unit of risk. Arkema SA is currently generating about -0.1 per unit of risk. If you would invest 869.00 in Weibo Corp on September 5, 2024 and sell it today you would earn a total of 121.00 from holding Weibo Corp or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.13% |
| Values | Daily Returns |
Weibo Corp vs. Arkema SA
Performance |
| Timeline |
| Weibo Corp |
| Arkema SA |
Weibo Corp and Arkema SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Arkema SA
The main advantage of trading using opposite Weibo Corp and Arkema SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Arkema SA 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 Arkema SA will offset losses from the drop in Arkema SA's long position.| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
| Arkema SA vs. Sherwin Williams Co | Arkema SA vs. Air Liquide SA | Arkema SA vs. Air Products and | Arkema SA vs. Ecolab Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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