Correlation Between Weibo Corp and Quad Graphics

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

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

Diversification Opportunities for Weibo Corp and Quad Graphics

0.03

Correlation Coefficient

Weibo Corp  Quad Graphics

Significant diversification

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

Pair Corralation between Weibo Corp and Quad Graphics

Allowing for the 90-day total investment horizon Weibo Corp is expected to under-perform the Quad Graphics. But the stock apears to be less risky and, when comparing its historical volatility, Weibo Corp is 1.11 times less risky than Quad Graphics. The stock trades about -0.02 of its potential returns per unit of risk. The Quad Graphics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  470.00  in Quad Graphics on January 26, 2024 and sell it today you would lose (4.00) from holding Quad Graphics or give up 0.85% of portfolio value over 90 days.

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

Weibo Corp  vs.  Quad Graphics

Weibo Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weibo Corp are ranked lower than 5 (%) 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.

Quad Graphics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quad Graphics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Weibo Corp and Quad Graphics

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

The idea behind Weibo Corp and Quad Graphics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.