Correlation Between Weibo Corp and Cedar Realty

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

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

Diversification Opportunities for Weibo Corp and Cedar Realty

0.63

Correlation Coefficient

Weibo Corp  Cedar Realty

Poor diversification

The 3 months correlation between Weibo and Cedar is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust and Weibo Corp 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 Weibo Corp are associated (or correlated) with Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Weibo Corp i.e., Weibo Corp and Cedar Realty go up and down completely randomly.

Pair Corralation between Weibo Corp and Cedar Realty

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 4.62 times less return on investment than Cedar Realty. In addition to that, Weibo Corp is 1.01 times more volatile than Cedar Realty Trust. It trades about 0.03 of its total potential returns per unit of risk. Cedar Realty Trust is currently generating about 0.13 per unit of volatility. If you would invest  1,466  in Cedar Realty Trust on December 27, 2024 and sell it today you would earn a total of  297.00  from holding Cedar Realty Trust or generate 20.26% return on investment over 90 days.

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

Weibo Corp  vs.  Cedar Realty Trust

Weibo Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Cedar Realty Trust

Risk-Adjusted Performance

OK

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

Pair Trading with Weibo Corp and Cedar Realty

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

The idea behind Weibo Corp and Cedar Realty Trust 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.