Correlation Between Weibo Corp and Digi International
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Digi International 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 Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Digi International, you can compare the effects of market volatilities on Weibo Corp and Digi International 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 Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Digi International.
Diversification Opportunities for Weibo Corp and Digi International
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Weibo and Digi is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International 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 Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Weibo Corp i.e., Weibo Corp and Digi International go up and down completely randomly.
Pair Corralation between Weibo Corp and Digi International
Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Digi International. In addition to that, Weibo Corp is 1.08 times more volatile than Digi International. It trades about -0.1 of its total potential returns per unit of risk. Digi International is currently generating about 0.15 per unit of volatility. If you would invest 3,051 in Digi International on August 27, 2024 and sell it today you would earn a total of 244.00 from holding Digi International or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. Digi International
Performance |
| Timeline |
| Weibo Corp |
| Digi International |
Weibo Corp and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Digi International
The main advantage of trading using opposite Weibo Corp and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Digi International 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 Digi International will offset losses from the drop in Digi International'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 |
| Digi International vs. Ichor Holdings | Digi International vs. Fabrinet | Digi International vs. Hello Group | Digi International vs. Ultra Clean Holdings |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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