Correlation Between Weibo Corp and 532457BZ0

Can any of the company-specific risk be diversified away by investing in both Weibo Corp and 532457BZ0 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 532457BZ0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Weibo Corp and ELI LILLY AND, you can compare the effects of market volatilities on Weibo Corp and 532457BZ0 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 532457BZ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and 532457BZ0.

Diversification Opportunities for Weibo Corp and 532457BZ0

0.33

Correlation Coefficient

Weibo Corp  532457BZ0

Weak diversification

The 3 months correlation between Weibo and 532457BZ0 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and ELI LILLY AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELI LILLY AND 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 532457BZ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELI LILLY AND has no effect on the direction of Weibo Corp i.e., Weibo Corp and 532457BZ0 go up and down completely randomly.

Pair Corralation between Weibo Corp and 532457BZ0

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 7.98 times less return on investment than 532457BZ0. But when comparing it to its historical volatility, Weibo Corp is 2.25 times less risky than 532457BZ0. It trades about 0.05 of its potential returns per unit of risk. ELI LILLY AND is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,777  in ELI LILLY AND on September 29, 2024 and sell it today you would earn a total of  1,028  from holding ELI LILLY AND or generate 17.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Weibo Corp  vs.  ELI LILLY AND

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 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.

ELI LILLY AND

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ELI LILLY AND are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 532457BZ0 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Weibo Corp and 532457BZ0

The main advantage of trading using opposite Weibo Corp and 532457BZ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, 532457BZ0 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 532457BZ0 will offset losses from the drop in 532457BZ0's long position.

The idea behind Weibo Corp and ELI LILLY AND 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.