Correlation Between Weibo Corp and Lion One

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

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

Diversification Opportunities for Weibo Corp and Lion One

0.24

Correlation Coefficient

Weibo Corp  Lion One

Modest diversification

The 3 months correlation between Weibo and Lion is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Weibo Corp i.e., Weibo Corp and Lion One go up and down completely randomly.

Pair Corralation between Weibo Corp and Lion One

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 0.67 times more return on investment than Lion One. However, Weibo Corp is 1.49 times less risky than Lion One. It trades about 0.27 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.25 per unit of risk. If you would invest  862.00  in Weibo Corp on September 9, 2024 and sell it today you would earn a total of  120.00  from holding Weibo Corp or generate 13.92% return on investment over 90 days.

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

Weibo Corp  vs.  Lion One Metals

Weibo Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Weibo Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential 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 Lion One

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

The idea behind Weibo Corp and Lion One Metals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.