Correlation Between Weibo Corp and Lucid
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Lucid 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 Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Lucid Group, you can compare the effects of market volatilities on Weibo Corp and Lucid 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 Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Lucid.
Diversification Opportunities for Weibo Corp and Lucid
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Weibo and Lucid is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group 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 Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Weibo Corp i.e., Weibo Corp and Lucid go up and down completely randomly.
Pair Corralation between Weibo Corp and Lucid
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 0.61 times more return on investment than Lucid. However, Weibo Corp is 1.64 times less risky than Lucid. It trades about 0.29 of its potential returns per unit of risk. Lucid Group is currently generating about 0.04 per unit of risk. If you would invest 862.00 in Weibo Corp on September 12, 2024 and sell it today you would earn a total of 167.00 from holding Weibo Corp or generate 19.37% 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. Lucid Group
Performance |
| Timeline |
| Weibo Corp |
| Lucid Group |
Weibo Corp and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Lucid
The main advantage of trading using opposite Weibo Corp and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Lucid 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 Lucid will offset losses from the drop in Lucid's long position.| Weibo Corp vs. Twilio Inc | Weibo Corp vs. Meta Platforms | Weibo Corp vs. Alphabet Inc Class C | Weibo Corp vs. Alphabet Inc Class A |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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