Correlation Between Weibo Corp and Cheetah Mobile
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Cheetah Mobile 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 Cheetah Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Cheetah Mobile, you can compare the effects of market volatilities on Weibo Corp and Cheetah Mobile 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 Cheetah Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Cheetah Mobile.
Diversification Opportunities for Weibo Corp and Cheetah Mobile
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weibo and Cheetah is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Cheetah Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheetah Mobile 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 Cheetah Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheetah Mobile has no effect on the direction of Weibo Corp i.e., Weibo Corp and Cheetah Mobile go up and down completely randomly.
Pair Corralation between Weibo Corp and Cheetah Mobile
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 0.44 times more return on investment than Cheetah Mobile. However, Weibo Corp is 2.26 times less risky than Cheetah Mobile. It trades about -0.04 of its potential returns per unit of risk. Cheetah Mobile is currently generating about -0.06 per unit of risk. If you would invest 990.00 in Weibo Corp on October 24, 2024 and sell it today you would lose (17.00) from holding Weibo Corp or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Weibo Corp vs. Cheetah Mobile
Performance |
| Timeline |
| Weibo Corp |
| Cheetah Mobile |
Weibo Corp and Cheetah Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Cheetah Mobile
The main advantage of trading using opposite Weibo Corp and Cheetah Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Cheetah Mobile 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 Cheetah Mobile will offset losses from the drop in Cheetah Mobile'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 |
| Cheetah Mobile vs. Tuniu Corp | Cheetah Mobile vs. Yirendai | Cheetah Mobile vs. Xunlei Ltd Adr | Cheetah Mobile vs. Phoenix New Media |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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