Correlation Between 25278XAQ2 and Weibo Corp

Can any of the company-specific risk be diversified away by investing in both 25278XAQ2 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 25278XAQ2 and Weibo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FANG 44 24 MAR 51 and Weibo Corp, you can compare the effects of market volatilities on 25278XAQ2 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 25278XAQ2 with a short position of Weibo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of 25278XAQ2 and Weibo Corp.

Diversification Opportunities for 25278XAQ2 and Weibo Corp

0.24

Correlation Coefficient

25278XAQ2  Weibo Corp

Modest diversification

The 3 months correlation between 25278XAQ2 and Weibo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FANG 44 24 MAR 51 and Weibo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weibo Corp and 25278XAQ2 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 FANG 44 24 MAR 51 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 25278XAQ2 i.e., 25278XAQ2 and Weibo Corp go up and down completely randomly.

Pair Corralation between 25278XAQ2 and Weibo Corp

Assuming the 90 days trading horizon 25278XAQ2 is expected to generate 1.6 times less return on investment than Weibo Corp. But when comparing it to its historical volatility, FANG 44 24 MAR 51 is 2.89 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 0.04 of returns per unit of risk over similar time horizon. If you would invest  954.00  in Weibo Corp on December 29, 2024 and sell it today you would earn a total of  47.00  from holding Weibo Corp or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

FANG 44 24 MAR 51  vs.  Weibo Corp

FANG 44 24

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FANG 44 24 MAR 51 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 25278XAQ2 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Weibo Corp

Risk-Adjusted Performance

Very Weak

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 25278XAQ2 and Weibo Corp

The main advantage of trading using opposite 25278XAQ2 and Weibo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 25278XAQ2 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 FANG 44 24 MAR 51 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.