Correlation Between Weibo Corp and Kenvue

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

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

Diversification Opportunities for Weibo Corp and Kenvue

-0.27

Correlation Coefficient

Weibo Corp  Kenvue

Very good diversification

The 3 months correlation between Weibo and Kenvue is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Weibo Corp i.e., Weibo Corp and Kenvue go up and down completely randomly.

Pair Corralation between Weibo Corp and Kenvue

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 2.47 times more return on investment than Kenvue. However, Weibo Corp is 2.47 times more volatile than Kenvue Inc. It trades about 0.0 of its potential returns per unit of risk. Kenvue Inc is currently generating about -0.21 per unit of risk. If you would invest  976.00  in Weibo Corp on October 21, 2024 and sell it today you would lose (3.00) from holding Weibo Corp or give up 0.31% of portfolio value over 90 days.

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

Weibo Corp  vs.  Kenvue Inc

Weibo Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 4 (%) 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 February 2025.

Kenvue Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenvue Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Weibo Corp and Kenvue

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

The idea behind Weibo Corp and Kenvue Inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.