Correlation Between WeWork and Leju Holdings

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

By analyzing existing cross correlation between WeWork Inc and Leju Holdings Limited, you can compare the effects of market volatilities on WeWork and Leju Holdings 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 WeWork with a short position of Leju Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of WeWork and Leju Holdings.

Diversification Opportunities for WeWork and Leju Holdings

-0.03

Correlation Coefficient

WeWork  Leju Holdings

Good diversification

The 3 months correlation between WeWork and Leju is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding WeWork Inc and Leju Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leju Holdings Limited and WeWork 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 WeWork Inc are associated (or correlated) with Leju Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leju Holdings Limited has no effect on the direction of WeWork i.e., WeWork and Leju Holdings go up and down completely randomly.

Pair Corralation between WeWork and Leju Holdings

If you would invest  207.00  in Leju Holdings Limited on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Leju Holdings Limited or generate 0.0% return on investment over 90 days.

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

WeWork Inc  vs.  Leju Holdings Limited

WeWork Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WeWork Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, WeWork is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Leju Holdings Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leju Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking indicators, Leju Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WeWork and Leju Holdings

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

The idea behind WeWork Inc and Leju Holdings Limited 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.