Correlation Between Healthy Choice and Weibo Corp

Can any of the company-specific risk be diversified away by investing in both Healthy Choice and Weibo Corp 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 Healthy Choice and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Healthy Choice Wellness and Weibo Corp, you can compare the effects of market volatilities on Healthy Choice and Weibo Corp 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 Healthy Choice with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthy Choice and Weibo Corp.

Diversification Opportunities for Healthy Choice and Weibo Corp

-0.11

Correlation Coefficient

Healthy Choice  Weibo Corp

Good diversification

The 3 months correlation between Healthy and Weibo is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Healthy Choice Wellness and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Healthy Choice 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 Healthy Choice Wellness are associated (or correlated) with Weibo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weibo Corp has no effect on the direction of Healthy Choice i.e., Healthy Choice and Weibo Corp go up and down completely randomly.

Pair Corralation between Healthy Choice and Weibo Corp

Given the investment horizon of 90 days Healthy Choice Wellness is expected to generate 9.43 times more return on investment than Weibo Corp. However, Healthy Choice is 9.43 times more volatile than Weibo Corp. It trades about 0.12 of its potential returns per unit of risk. Weibo Corp is currently generating about -0.32 per unit of risk. If you would invest  132.00  in Healthy Choice Wellness on October 10, 2024 and sell it today you would earn a total of  28.00  from holding Healthy Choice Wellness or generate 21.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Healthy Choice Wellness  vs.  Weibo Corp

Healthy Choice Wellness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthy Choice Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Healthy Choice is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Weibo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Healthy Choice and Weibo Corp

The main advantage of trading using opposite Healthy Choice and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthy Choice position performs unexpectedly, Weibo Corp 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 Weibo Corp will offset losses from the drop in Weibo Corp's long position.

The idea behind Healthy Choice Wellness and Weibo Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Valuation module to check real value of public entities based on technical and fundamental data.