Correlation Between So Young and Weave Communications

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

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

Diversification Opportunities for So Young and Weave Communications

0.32

Correlation Coefficient

So Young  Weave Communications

Weak diversification

The 3 months correlation between So Young and Weave is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding So Young International and Weave Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weave Communications and So Young 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 So Young International are associated (or correlated) with Weave Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weave Communications has no effect on the direction of So Young i.e., So Young and Weave Communications go up and down completely randomly.

Pair Corralation between So Young and Weave Communications

Allowing for the 90-day total investment horizon So Young is expected to generate 3.84 times less return on investment than Weave Communications. In addition to that, So Young is 2.32 times more volatile than Weave Communications. It trades about 0.02 of its total potential returns per unit of risk. Weave Communications is currently generating about 0.16 per unit of volatility. If you would invest  1,100  in Weave Communications on August 31, 2024 and sell it today you would earn a total of  301.00  from holding Weave Communications or generate 27.36% return on investment over 90 days.

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

So Young International  vs.  Weave Communications

So Young International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in So Young International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, So Young may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Weave Communications

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Weave Communications are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Weave Communications showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with So Young and Weave Communications

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

The idea behind So Young International and Weave Communications 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.