Correlation Between Weibo Corp and PACIFIC

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

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

Diversification Opportunities for Weibo Corp and PACIFIC

0.44

Correlation Coefficient

Weibo Corp  PACIFIC

Very weak diversification

The 3 months correlation between Weibo and PACIFIC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and PACIFIC GAS ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS ELECTRIC 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS ELECTRIC has no effect on the direction of Weibo Corp i.e., Weibo Corp and PACIFIC go up and down completely randomly.

Pair Corralation between Weibo Corp and PACIFIC

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 12.11 times more return on investment than PACIFIC. However, Weibo Corp is 12.11 times more volatile than PACIFIC GAS ELECTRIC. It trades about 0.05 of its potential returns per unit of risk. PACIFIC GAS ELECTRIC is currently generating about 0.04 per unit of risk. If you would invest  756.00  in Weibo Corp on October 22, 2024 and sell it today you would earn a total of  217.00  from holding Weibo Corp or generate 28.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

Weibo Corp  vs.  PACIFIC GAS ELECTRIC

Weibo Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Weibo Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PACIFIC GAS ELECTRIC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS ELECTRIC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PACIFIC 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 PACIFIC

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

The idea behind Weibo Corp and PACIFIC GAS ELECTRIC 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.