Correlation Between Weibo Corp and CROWN

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

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

Diversification Opportunities for Weibo Corp and CROWN

0.65

Correlation Coefficient

Weibo Corp  CROWN

Poor diversification

The 3 months correlation between Weibo and CROWN is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and CROWN CASTLE INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTERNA 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTERNA has no effect on the direction of Weibo Corp i.e., Weibo Corp and CROWN go up and down completely randomly.

Pair Corralation between Weibo Corp and CROWN

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the CROWN. In addition to that, Weibo Corp is 22.91 times more volatile than CROWN CASTLE INTERNATIONAL. It trades about -0.1 of its total potential returns per unit of risk. CROWN CASTLE INTERNATIONAL is currently generating about 0.07 per unit of volatility. If you would invest  9,429  in CROWN CASTLE INTERNATIONAL on October 4, 2024 and sell it today you would earn a total of  16.00  from holding CROWN CASTLE INTERNATIONAL or generate 0.17% return on investment over 90 days.

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

Weibo Corp  vs.  CROWN CASTLE INTERNATIONAL

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 inconsistent performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CROWN CASTLE INTERNA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CROWN CASTLE INTERNATIONAL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Weibo Corp and CROWN

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

The idea behind Weibo Corp and CROWN CASTLE INTERNATIONAL 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.