Correlation Between Weibo Corp and Yelp
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Yelp 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 Yelp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Yelp Inc, you can compare the effects of market volatilities on Weibo Corp and Yelp 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 Yelp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Yelp.
Diversification Opportunities for Weibo Corp and Yelp
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Weibo and Yelp is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Yelp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yelp Inc 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 Yelp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yelp Inc has no effect on the direction of Weibo Corp i.e., Weibo Corp and Yelp go up and down completely randomly.
Pair Corralation between Weibo Corp and Yelp
Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Yelp. In addition to that, Weibo Corp is 1.69 times more volatile than Yelp Inc. It trades about -0.01 of its total potential returns per unit of risk. Yelp Inc is currently generating about 0.02 per unit of volatility. If you would invest 3,423 in Yelp Inc on August 27, 2024 and sell it today you would earn a total of 190.00 from holding Yelp Inc or generate 5.55% 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. Yelp Inc
Performance |
| Timeline |
| Weibo Corp |
| Yelp Inc |
Weibo Corp and Yelp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and Yelp
The main advantage of trading using opposite Weibo Corp and Yelp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Yelp 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 Yelp will offset losses from the drop in Yelp'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 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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