Correlation Between LEGACY IRON and Meituan
Can any of the company-specific risk be diversified away by investing in both LEGACY IRON and Meituan 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 LEGACY IRON and Meituan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGACY IRON ORE and Meituan, you can compare the effects of market volatilities on LEGACY IRON and Meituan 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 LEGACY IRON with a short position of Meituan. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGACY IRON and Meituan.
Diversification Opportunities for LEGACY IRON and Meituan
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LEGACY and Meituan is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding LEGACY IRON ORE and Meituan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan and LEGACY IRON 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 LEGACY IRON ORE are associated (or correlated) with Meituan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meituan has no effect on the direction of LEGACY IRON i.e., LEGACY IRON and Meituan go up and down completely randomly.
Pair Corralation between LEGACY IRON and Meituan
Assuming the 90 days trading horizon LEGACY IRON ORE is expected to under-perform the Meituan. But the stock apears to be less risky and, when comparing its historical volatility, LEGACY IRON ORE is 7.27 times less risky than Meituan. The stock trades about -0.06 of its potential returns per unit of risk. The Meituan is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,236 in Meituan on August 30, 2024 and sell it today you would lose (107.00) from holding Meituan or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEGACY IRON ORE vs. Meituan
Performance |
| Timeline |
| LEGACY IRON ORE |
| Meituan |
LEGACY IRON and Meituan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEGACY IRON and Meituan
The main advantage of trading using opposite LEGACY IRON and Meituan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGACY IRON position performs unexpectedly, Meituan 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 Meituan will offset losses from the drop in Meituan's long position.| LEGACY IRON vs. CompuGroup Medical SE | LEGACY IRON vs. Platinum Investment Management | LEGACY IRON vs. MeVis Medical Solutions | LEGACY IRON vs. Q2M Managementberatung AG |
| Meituan vs. BLUESCOPE STEEL | Meituan vs. ZANAGA IRON ORE | Meituan vs. LEGACY IRON ORE | Meituan vs. Boiron SA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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