Correlation Between Cars and Meiwu Technology
Can any of the company-specific risk be diversified away by investing in both Cars and Meiwu Technology 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 Cars and Meiwu Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Meiwu Technology Co, you can compare the effects of market volatilities on Cars and Meiwu Technology 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 Cars with a short position of Meiwu Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Meiwu Technology.
Diversification Opportunities for Cars and Meiwu Technology
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cars and Meiwu is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Meiwu Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiwu Technology and Cars 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 Cars Inc are associated (or correlated) with Meiwu Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiwu Technology has no effect on the direction of Cars i.e., Cars and Meiwu Technology go up and down completely randomly.
Pair Corralation between Cars and Meiwu Technology
Given the investment horizon of 90 days Cars Inc is expected to generate 0.25 times more return on investment than Meiwu Technology. However, Cars Inc is 4.06 times less risky than Meiwu Technology. It trades about 0.02 of its potential returns per unit of risk. Meiwu Technology Co is currently generating about -0.01 per unit of risk. If you would invest 1,794 in Cars Inc on September 2, 2024 and sell it today you would earn a total of 193.00 from holding Cars Inc or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. Meiwu Technology Co
Performance |
| Timeline |
| Cars Inc |
| Meiwu Technology |
Cars and Meiwu Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Meiwu Technology
The main advantage of trading using opposite Cars and Meiwu Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Meiwu Technology 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 Meiwu Technology will offset losses from the drop in Meiwu Technology's long position.The idea behind Cars Inc and Meiwu Technology Co 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.| Meiwu Technology vs. BJs Wholesale Club | Meiwu Technology vs. Dollar General | Meiwu Technology vs. Grocery Outlet Holding | Meiwu Technology vs. Kroger Company |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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