Correlation Between 04316JAD1 and Weibo Corp

Can any of the company-specific risk be diversified away by investing in both 04316JAD1 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 04316JAD1 and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AJG 55 02 MAR 33 and Weibo Corp, you can compare the effects of market volatilities on 04316JAD1 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 04316JAD1 with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of 04316JAD1 and Weibo Corp.

Diversification Opportunities for 04316JAD1 and Weibo Corp

0.53

Correlation Coefficient

04316JAD1  Weibo Corp

Very weak diversification

The 3 months correlation between 04316JAD1 and Weibo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AJG 55 02 MAR 33 and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and 04316JAD1 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 AJG 55 02 MAR 33 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 04316JAD1 i.e., 04316JAD1 and Weibo Corp go up and down completely randomly.

Pair Corralation between 04316JAD1 and Weibo Corp

Assuming the 90 days trading horizon AJG 55 02 MAR 33 is expected to generate 0.22 times more return on investment than Weibo Corp. However, AJG 55 02 MAR 33 is 4.54 times less risky than Weibo Corp. It trades about 0.08 of its potential returns per unit of risk. Weibo Corp is currently generating about 0.0 per unit of risk. If you would invest  10,071  in AJG 55 02 MAR 33 on December 30, 2024 and sell it today you would earn a total of  304.00  from holding AJG 55 02 MAR 33 or generate 3.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

AJG 55 02 MAR 33  vs.  Weibo Corp

AJG 55 02

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AJG 55 02 MAR 33 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 04316JAD1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Weibo Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Weibo Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 04316JAD1 and Weibo Corp

The main advantage of trading using opposite 04316JAD1 and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 04316JAD1 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 AJG 55 02 MAR 33 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.