Correlation Between Weibo Corp and Hello
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Hello 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 Hello into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Hello Group, you can compare the effects of market volatilities on Weibo Corp and Hello 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 Hello. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Hello.
Diversification Opportunities for Weibo Corp and Hello
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Weibo and Hello is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Hello Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hello 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 Hello. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hello Group has no effect on the direction of Weibo Corp i.e., Weibo Corp and Hello go up and down completely randomly.
Pair Corralation between Weibo Corp and Hello
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.34 times more return on investment than Hello. However, Weibo Corp is 1.34 times more volatile than Hello Group. It trades about -0.1 of its potential returns per unit of risk. Hello Group is currently generating about -0.22 per unit of risk. If you would invest 959.00 in Weibo Corp on August 27, 2024 and sell it today you would lose (67.00) from holding Weibo Corp or give up 6.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. Hello Group
Performance |
| Timeline |
| Weibo Corp |
| Hello Group |
Weibo Corp and Hello Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Hello
The main advantage of trading using opposite Weibo Corp and Hello positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Hello 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 Hello will offset losses from the drop in Hello'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 |
| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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