Correlation Between Weibo Corp and Seadrill
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Seadrill 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 Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Seadrill Limited, you can compare the effects of market volatilities on Weibo Corp and Seadrill 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 Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Seadrill.
Diversification Opportunities for Weibo Corp and Seadrill
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Weibo and Seadrill is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited 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 Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Weibo Corp i.e., Weibo Corp and Seadrill go up and down completely randomly.
Pair Corralation between Weibo Corp and Seadrill
Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.19 times more return on investment than Seadrill. However, Weibo Corp is 1.19 times more volatile than Seadrill Limited. It trades about 0.06 of its potential returns per unit of risk. Seadrill Limited is currently generating about 0.04 per unit of risk. If you would invest 929.00 in Weibo Corp on September 6, 2024 and sell it today you would earn a total of 28.00 from holding Weibo Corp or generate 3.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Weibo Corp vs. Seadrill Limited
Performance |
Timeline |
Weibo Corp |
Seadrill Limited |
Weibo Corp and Seadrill Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Weibo Corp and Seadrill
The main advantage of trading using opposite Weibo Corp and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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