Correlation Between Weibo Corp and Li Bang

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

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

Diversification Opportunities for Weibo Corp and Li Bang

-0.4

Correlation Coefficient

Weibo Corp  Li Bang

Very good diversification

The 3 months correlation between Weibo and LBGJ is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Li Bang International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Bang International 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 Li Bang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Bang International has no effect on the direction of Weibo Corp i.e., Weibo Corp and Li Bang go up and down completely randomly.

Pair Corralation between Weibo Corp and Li Bang

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Li Bang. But the stock apears to be less risky and, when comparing its historical volatility, Weibo Corp is 2.82 times less risky than Li Bang. The stock trades about -0.02 of its potential returns per unit of risk. The Li Bang International is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  410.00  in Li Bang International on October 4, 2024 and sell it today you would lose (65.00) from holding Li Bang International or give up 15.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	9.88%
Values	Daily Returns

Weibo Corp  vs.  Li Bang International

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 weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Li Bang International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Li Bang International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Li Bang is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Weibo Corp and Li Bang

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

The idea behind Weibo Corp and Li Bang International 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.