Correlation Between Weibo Corp and Daiwa Securities

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

By analyzing existing cross correlation between Weibo Corp and Daiwa Securities Group, you can compare the effects of market volatilities on Weibo Corp and Daiwa Securities 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 Daiwa Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Daiwa Securities.

Diversification Opportunities for Weibo Corp and Daiwa Securities

0.66

Correlation Coefficient

Weibo Corp  Daiwa Securities

Poor diversification

The 3 months correlation between Weibo and Daiwa is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities 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 Daiwa Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa Securities has no effect on the direction of Weibo Corp i.e., Weibo Corp and Daiwa Securities go up and down completely randomly.

Pair Corralation between Weibo Corp and Daiwa Securities

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.63 times more return on investment than Daiwa Securities. However, Weibo Corp is 1.63 times more volatile than Daiwa Securities Group. It trades about 0.07 of its potential returns per unit of risk. Daiwa Securities Group is currently generating about 0.11 per unit of risk. If you would invest  985.00  in Weibo Corp on December 19, 2024 and sell it today you would earn a total of  100.00  from holding Weibo Corp or generate 10.15% return on investment over 90 days.

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

Weibo Corp  vs.  Daiwa Securities Group

Weibo Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Weibo Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Daiwa Securities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daiwa Securities Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Daiwa Securities may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Weibo Corp and Daiwa Securities

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

The idea behind Weibo Corp and Daiwa Securities Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.