Correlation Between Weibo Corp and Weyco

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

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

Diversification Opportunities for Weibo Corp and Weyco

-0.11

Correlation Coefficient

Weibo Corp  Weyco

Good diversification

The 3 months correlation between Weibo and Weyco is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Weibo Corp and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco 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 Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Weibo Corp i.e., Weibo Corp and Weyco go up and down completely randomly.

Pair Corralation between Weibo Corp and Weyco

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Weyco. In addition to that, Weibo Corp is 1.45 times more volatile than Weyco Group. It trades about -0.01 of its total potential returns per unit of risk. Weyco Group is currently generating about 0.05 per unit of volatility. If you would invest  2,270  in Weyco Group on September 13, 2024 and sell it today you would earn a total of  1,091  from holding Weyco Group or generate 48.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Weibo Corp  vs.  Weyco 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 weak fundamental drivers, Weibo Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Weyco Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Weyco is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Weibo Corp and Weyco

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

The idea behind Weibo Corp and Weyco 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.