Correlation Between Shutterstock and Weibo Corp

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

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

Diversification Opportunities for Shutterstock and Weibo Corp

-0.44

Correlation Coefficient

Shutterstock  Weibo Corp

Very good diversification

The 3 months correlation between Shutterstock and Weibo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shutterstock and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Shutterstock 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 Shutterstock 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 Shutterstock i.e., Shutterstock and Weibo Corp go up and down completely randomly.

Pair Corralation between Shutterstock and Weibo Corp

Given the investment horizon of 90 days Shutterstock is expected to under-perform the Weibo Corp. But the stock apears to be less risky and, when comparing its historical volatility, Shutterstock is 1.47 times less risky than Weibo Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Weibo Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  735.00  in Weibo Corp on September 1, 2024 and sell it today you would earn a total of  225.00  from holding Weibo Corp or generate 30.61% return on investment over 90 days.

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

Shutterstock  vs.  Weibo Corp

Shutterstock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shutterstock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Shutterstock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Weibo Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Weibo Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shutterstock and Weibo Corp

The main advantage of trading using opposite Shutterstock and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shutterstock 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 Shutterstock 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.