Correlation Between Weibo Corp and SIMON

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

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

Diversification Opportunities for Weibo Corp and SIMON

-0.3

Correlation Coefficient

Weibo Corp  SIMON

Very good diversification

The 3 months correlation between Weibo and SIMON is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP 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 SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Weibo Corp i.e., Weibo Corp and SIMON go up and down completely randomly.

Pair Corralation between Weibo Corp and SIMON

Allowing for the 90-day total investment horizon Weibo Corp is expected to generate 10.85 times more return on investment than SIMON. However, Weibo Corp is 10.85 times more volatile than SIMON PPTY GROUP. It trades about 0.16 of its potential returns per unit of risk. SIMON PPTY GROUP is currently generating about -0.12 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	Insignificant
Accuracy	98.44%
Values	Daily Returns

Weibo Corp  vs.  SIMON PPTY GROUP

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.

SIMON PPTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Weibo Corp and SIMON

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

The idea behind Weibo Corp and SIMON PPTY GROUP 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.