Correlation Between Weibo Corp and Arena Group
Can any of the company-specific risk be diversified away by investing in both Weibo Corp and Arena Group 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 Arena Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weibo Corp and Arena Group Holdings, you can compare the effects of market volatilities on Weibo Corp and Arena Group 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 Arena Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weibo Corp and Arena Group.
Diversification Opportunities for Weibo Corp and Arena Group
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weibo and Arena is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Arena Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Group Holdings 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 Arena Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Group Holdings has no effect on the direction of Weibo Corp i.e., Weibo Corp and Arena Group go up and down completely randomly.
Pair Corralation between Weibo Corp and Arena Group
Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Arena Group. But the stock apears to be less risky and, when comparing its historical volatility, Weibo Corp is 2.25 times less risky than Arena Group. The stock trades about -0.04 of its potential returns per unit of risk. The Arena Group Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 75.00 in Arena Group Holdings on June 23, 2024 and sell it today you would earn a total of 6.00 from holding Arena Group Holdings or generate 8.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Weibo Corp vs. Arena Group Holdings
Performance |
Timeline |
Weibo Corp |
Arena Group Holdings |
Weibo Corp and Arena Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Weibo Corp and Arena Group
The main advantage of trading using opposite Weibo Corp and Arena Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weibo Corp position performs unexpectedly, Arena Group 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 Arena Group will offset losses from the drop in Arena Group's long position.Weibo Corp vs. YY Inc Class | Weibo Corp vs. DouYu International Holdings | Weibo Corp vs. Tencent Music Entertainment | Weibo Corp vs. Autohome |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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