Correlation Between Weibo Corp and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Natural Alternatives 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 Natural Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Natural Alternatives International, you can compare the effects of market volatilities on Weibo Corp and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Natural Alternatives.
Diversification Opportunities for Weibo Corp and Natural Alternatives
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Weibo and Natural is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Weibo Corp i.e., Weibo Corp and Natural Alternatives go up and down completely randomly.
Pair Corralation between Weibo Corp and Natural Alternatives
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.34 times more return on investment than Natural Alternatives. However, Weibo Corp is 1.34 times more volatile than Natural Alternatives International. It trades about 0.04 of its potential returns per unit of risk. Natural Alternatives International is currently generating about -0.11 per unit of risk. If you would invest 928.00 in Weibo Corp on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Weibo Corp or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Weibo Corp vs. Natural Alternatives Internati
Performance |
| Timeline |
| Weibo Corp |
| Natural Alternatives |
Weibo Corp and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Natural Alternatives
The main advantage of trading using opposite Weibo Corp and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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