Correlation Between Weibo Corp and Pool

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

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

Diversification Opportunities for Weibo Corp and Pool

0.1

Correlation Coefficient

Weibo Corp  Pool

Average diversification

The 3 months correlation between Weibo and Pool is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of Weibo Corp i.e., Weibo Corp and Pool go up and down completely randomly.

Pair Corralation between Weibo Corp and Pool

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.71 times more return on investment than Pool. However, Weibo Corp is 1.71 times more volatile than Pool Corporation. It trades about 0.05 of its potential returns per unit of risk. Pool Corporation is currently generating about 0.0 per unit of risk. If you would invest  757.00  in Weibo Corp on October 2, 2024 and sell it today you would earn a total of  198.00  from holding Weibo Corp or generate 26.16% return on investment over 90 days.

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

Weibo Corp  vs.  Pool Corp.

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 unsteady 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.

Pool

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pool Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Weibo Corp and Pool

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

The idea behind Weibo Corp and Pool Corporation 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.