Correlation Between Ardagh and Weibo Corp

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

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

Diversification Opportunities for Ardagh and Weibo Corp

-0.23

Correlation Coefficient

Ardagh  Weibo Corp

Very good diversification

The 3 months correlation between Ardagh and Weibo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ardagh Packaging Finance and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and Ardagh 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 Ardagh Packaging Finance 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 Ardagh i.e., Ardagh and Weibo Corp go up and down completely randomly.

Pair Corralation between Ardagh and Weibo Corp

Assuming the 90 days trading horizon Ardagh Packaging Finance is expected to generate 2.48 times more return on investment than Weibo Corp. However, Ardagh is 2.48 times more volatile than Weibo Corp. It trades about 0.06 of its potential returns per unit of risk. Weibo Corp is currently generating about 0.04 per unit of risk. If you would invest  5,704  in Ardagh Packaging Finance on December 29, 2024 and sell it today you would earn a total of  342.00  from holding Ardagh Packaging Finance or generate 6.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.9%
Values	Daily Returns

Ardagh Packaging Finance  vs.  Weibo Corp

Ardagh Packaging Finance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ardagh Packaging Finance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ardagh sustained solid returns over the last few months and may actually be approaching a breakup point.

Weibo Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Weibo Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ardagh and Weibo Corp

The main advantage of trading using opposite Ardagh and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardagh 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 Ardagh Packaging Finance 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.