Correlation Between Weibo Corp and Golden Matrix

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

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

Diversification Opportunities for Weibo Corp and Golden Matrix

-0.56

Correlation Coefficient

Weibo Corp  Golden Matrix

Excellent diversification

The 3 months correlation between Weibo and Golden is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Golden Matrix Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Matrix 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 Golden Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Matrix Group has no effect on the direction of Weibo Corp i.e., Weibo Corp and Golden Matrix go up and down completely randomly.

Pair Corralation between Weibo Corp and Golden Matrix

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Golden Matrix. But the stock apears to be less risky and, when comparing its historical volatility, Weibo Corp is 1.77 times less risky than Golden Matrix. The stock trades about -0.03 of its potential returns per unit of risk. The Golden Matrix Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  346.00  in Golden Matrix Group on September 26, 2024 and sell it today you would lose (143.00) from holding Golden Matrix Group or give up 41.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Weibo Corp  vs.  Golden Matrix Group

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 January 2025.

Golden Matrix Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Matrix Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Weibo Corp and Golden Matrix

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

The idea behind Weibo Corp and Golden Matrix 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.