Correlation Between Weibo Corp and YY
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and YY 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 YY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and YY Inc Class, you can compare the effects of market volatilities on Weibo Corp and YY 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 YY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and YY.
Diversification Opportunities for Weibo Corp and YY
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weibo and YY is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and YY Inc Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Inc Class 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 YY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Inc Class has no effect on the direction of Weibo Corp i.e., Weibo Corp and YY go up and down completely randomly.
Pair Corralation between Weibo Corp and YY
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 2.08 times less return on investment than YY. But when comparing it to its historical volatility, Weibo Corp is 1.17 times less risky than YY. It trades about 0.1 of its potential returns per unit of risk. YY Inc Class is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,310 in YY Inc Class on November 1, 2024 and sell it today you would earn a total of 1,214 from holding YY Inc Class or generate 36.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weibo Corp vs. YY Inc Class
Performance |
| Timeline |
| Weibo Corp |
| YY Inc Class |
Weibo Corp and YY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weibo Corp and YY
The main advantage of trading using opposite Weibo Corp and YY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, YY 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 YY will offset losses from the drop in YY'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 |
| YY vs. Weibo Corp | YY vs. DouYu International Holdings | YY vs. Tencent Music Entertainment | YY 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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