Correlation Between Weibo Corp and PTL

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

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

Diversification Opportunities for Weibo Corp and PTL

-0.67

Correlation Coefficient

Weibo Corp  PTL

Excellent diversification

The 3 months correlation between Weibo and PTL is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and PTL LTD Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTL LTD Ordinary 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 PTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTL LTD Ordinary has no effect on the direction of Weibo Corp i.e., Weibo Corp and PTL go up and down completely randomly.

Pair Corralation between Weibo Corp and PTL

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 0.19 times more return on investment than PTL. However, Weibo Corp is 5.21 times less risky than PTL. It trades about 0.04 of its potential returns per unit of risk. PTL LTD Ordinary is currently generating about -0.11 per unit of risk. If you would invest  1,003  in Weibo Corp on December 16, 2024 and sell it today you would earn a total of  53.00  from holding Weibo Corp or generate 5.28% return on investment over 90 days.

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

Weibo Corp  vs.  PTL LTD Ordinary

Weibo Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Weibo Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PTL LTD Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days PTL LTD Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Weibo Corp and PTL

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

The idea behind Weibo Corp and PTL LTD Ordinary 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.