Correlation Between Weibo Corp and Entegris

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

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

Diversification Opportunities for Weibo Corp and Entegris

0.51

Correlation Coefficient

Weibo Corp  Entegris

Very weak diversification

The 3 months correlation between Weibo and Entegris is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris 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 Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of Weibo Corp i.e., Weibo Corp and Entegris go up and down completely randomly.

Pair Corralation between Weibo Corp and Entegris

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Entegris. In addition to that, Weibo Corp is 1.17 times more volatile than Entegris. It trades about -0.02 of its total potential returns per unit of risk. Entegris is currently generating about 0.03 per unit of volatility. If you would invest  7,868  in Entegris on October 3, 2024 and sell it today you would earn a total of  2,086  from holding Entegris or generate 26.51% return on investment over 90 days.

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

Weibo Corp  vs.  Entegris

Weibo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Entegris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entegris has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Weibo Corp and Entegris

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

The idea behind Weibo Corp and Entegris 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.