Correlation Between Weibo Corp and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and HE Equipment 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 HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and HE Equipment Services, you can compare the effects of market volatilities on Weibo Corp and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and HE Equipment.
Diversification Opportunities for Weibo Corp and HE Equipment
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Weibo and HEES is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Weibo Corp i.e., Weibo Corp and HE Equipment go up and down completely randomly.
Pair Corralation between Weibo Corp and HE Equipment
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.55 times more return on investment than HE Equipment. However, Weibo Corp is 1.55 times more volatile than HE Equipment Services. It trades about 0.11 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.03 per unit of risk. If you would invest 776.00 in Weibo Corp on September 22, 2024 and sell it today you would earn a total of 209.00 from holding Weibo Corp or generate 26.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. HE Equipment Services
Performance |
| Timeline |
| Weibo Corp |
| HE Equipment Services |
Weibo Corp and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and HE Equipment
The main advantage of trading using opposite Weibo Corp and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment'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 |
| HE Equipment vs. McGrath RentCorp | HE Equipment vs. PROG Holdings | HE Equipment vs. Mega Matrix Corp | HE Equipment vs. FTAI Aviation Ltd |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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