Correlation Between Weibo Corp and SNDL

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

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

Diversification Opportunities for Weibo Corp and SNDL

-0.4

Correlation Coefficient

Weibo Corp  SNDL

Very good diversification

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

Pair Corralation between Weibo Corp and SNDL

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 1.38 times more return on investment than SNDL. However, Weibo Corp is 1.38 times more volatile than SNDL Inc. It trades about 0.16 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.08 per unit of risk. If you would invest  723.00  in Weibo Corp on September 15, 2024 and sell it today you would earn a total of  313.00  from holding Weibo Corp or generate 43.29% return on investment over 90 days.

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

Weibo Corp  vs.  SNDL Inc

Weibo Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Weibo Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

SNDL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Weibo Corp and SNDL

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

The idea behind Weibo Corp and SNDL Inc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.