Correlation Between Weibo Corp and KROGER

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

By analyzing existing cross correlation between Weibo Corp and KROGER 75 percent, you can compare the effects of market volatilities on Weibo Corp and KROGER 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 KROGER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and KROGER.

Diversification Opportunities for Weibo Corp and KROGER

0.41

Correlation Coefficient

Weibo Corp  KROGER

Very weak diversification

The 3 months correlation between Weibo and KROGER is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and KROGER 75 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KROGER 75 percent 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 KROGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KROGER 75 percent has no effect on the direction of Weibo Corp i.e., Weibo Corp and KROGER go up and down completely randomly.

Pair Corralation between Weibo Corp and KROGER

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 6.16 times more return on investment than KROGER. However, Weibo Corp is 6.16 times more volatile than KROGER 75 percent. It trades about 0.0 of its potential returns per unit of risk. KROGER 75 percent is currently generating about 0.03 per unit of risk. If you would invest  954.00  in Weibo Corp on December 30, 2024 and sell it today you would lose (15.00) from holding Weibo Corp or give up 1.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.32%
Values	Daily Returns

Weibo Corp  vs.  KROGER 75 percent

Weibo Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Weibo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Weibo Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KROGER 75 percent

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KROGER 75 percent are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KROGER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Weibo Corp and KROGER

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

The idea behind Weibo Corp and KROGER 75 percent 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.