Correlation Between Weibo Corp and Franklin Wireless
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Franklin Wireless 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 Franklin Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Franklin Wireless Corp, you can compare the effects of market volatilities on Weibo Corp and Franklin Wireless 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 Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Franklin Wireless.
Diversification Opportunities for Weibo Corp and Franklin Wireless
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weibo and Franklin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp 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 Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of Weibo Corp i.e., Weibo Corp and Franklin Wireless go up and down completely randomly.
Pair Corralation between Weibo Corp and Franklin Wireless
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 2.45 times more return on investment than Franklin Wireless. However, Weibo Corp is 2.45 times more volatile than Franklin Wireless Corp. It trades about -0.02 of its potential returns per unit of risk. Franklin Wireless Corp is currently generating about -0.11 per unit of risk. If you would invest 1,008 in Weibo Corp on August 30, 2024 and sell it today you would lose (62.00) from holding Weibo Corp or give up 6.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. Franklin Wireless Corp
Performance |
| Timeline |
| Weibo Corp |
| Franklin Wireless Corp |
Weibo Corp and Franklin Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Franklin Wireless
The main advantage of trading using opposite Weibo Corp and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Franklin Wireless 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 Franklin Wireless will offset losses from the drop in Franklin Wireless' long position.| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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