Correlation Between Weibo Corp and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and IPG Photonics 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 IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and IPG Photonics, you can compare the effects of market volatilities on Weibo Corp and IPG Photonics 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 IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and IPG Photonics.
Diversification Opportunities for Weibo Corp and IPG Photonics
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weibo and IPG is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics 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 IPG Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPG Photonics has no effect on the direction of Weibo Corp i.e., Weibo Corp and IPG Photonics go up and down completely randomly.
Pair Corralation between Weibo Corp and IPG Photonics
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.33 times more return on investment than IPG Photonics. However, Weibo Corp is 1.33 times more volatile than IPG Photonics. It trades about -0.01 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.03 per unit of risk. If you would invest 1,235 in Weibo Corp on September 2, 2024 and sell it today you would lose (275.00) from holding Weibo Corp or give up 22.27% 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. IPG Photonics
Performance |
| Timeline |
| Weibo Corp |
| IPG Photonics |
Weibo Corp and IPG Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and IPG Photonics
The main advantage of trading using opposite Weibo Corp and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, IPG Photonics 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 IPG Photonics will offset losses from the drop in IPG Photonics' long position.| Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
| IPG Photonics vs. Teradyne | IPG Photonics vs. Ultra Clean Holdings | IPG Photonics vs. Onto Innovation | IPG Photonics vs. Entegris |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |