Correlation Between Weibo Corp and Universal Media
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Universal Media 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 Universal Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Universal Media Group, you can compare the effects of market volatilities on Weibo Corp and Universal Media 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 Universal Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Universal Media.
Diversification Opportunities for Weibo Corp and Universal Media
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weibo and Universal is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Universal Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Media 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 Universal Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Media Group has no effect on the direction of Weibo Corp i.e., Weibo Corp and Universal Media go up and down completely randomly.
Pair Corralation between Weibo Corp and Universal Media
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 10.38 times less return on investment than Universal Media. But when comparing it to its historical volatility, Weibo Corp is 7.73 times less risky than Universal Media. It trades about 0.12 of its potential returns per unit of risk. Universal Media Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Universal Media Group on September 2, 2024 and sell it today you would earn a total of 0.70 from holding Universal Media Group or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. Universal Media Group
Performance |
| Timeline |
| Weibo Corp |
| Universal Media Group |
Weibo Corp and Universal Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Universal Media
The main advantage of trading using opposite Weibo Corp and Universal Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Universal Media 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 Universal Media will offset losses from the drop in Universal Media'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 |
| Universal Media vs. Ihuman Inc | Universal Media vs. SEI Investments | Universal Media vs. Afya | Universal Media vs. Skillful Craftsman Education |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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