Correlation Between Weibo Corp and Turning Point
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Turning Point 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 Turning Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Turning Point Brands, you can compare the effects of market volatilities on Weibo Corp and Turning Point 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 Turning Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Turning Point.
Diversification Opportunities for Weibo Corp and Turning Point
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Weibo and Turning is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Turning Point Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turning Point Brands 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 Turning Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turning Point Brands has no effect on the direction of Weibo Corp i.e., Weibo Corp and Turning Point go up and down completely randomly.
Pair Corralation between Weibo Corp and Turning Point
Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Turning Point. In addition to that, Weibo Corp is 1.57 times more volatile than Turning Point Brands. It trades about -0.02 of its total potential returns per unit of risk. Turning Point Brands is currently generating about 0.12 per unit of volatility. If you would invest 2,046 in Turning Point Brands on September 3, 2024 and sell it today you would earn a total of 4,043 from holding Turning Point Brands or generate 197.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. Turning Point Brands
Performance |
| Timeline |
| Weibo Corp |
| Turning Point Brands |
Weibo Corp and Turning Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Turning Point
The main advantage of trading using opposite Weibo Corp and Turning Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Turning Point 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 Turning Point will offset losses from the drop in Turning Point'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 |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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