Correlation Between Futu Holdings and Magic Empire
Can any of the company-specific risk be diversified away by investing in both Futu Holdings and Magic Empire 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 Futu Holdings and Magic Empire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Futu Holdings and Magic Empire Global, you can compare the effects of market volatilities on Futu Holdings and Magic Empire 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 Futu Holdings with a short position of Magic Empire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futu Holdings and Magic Empire.
Diversification Opportunities for Futu Holdings and Magic Empire
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Futu and Magic is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Futu Holdings and Magic Empire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Empire Global and Futu Holdings 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 Futu Holdings are associated (or correlated) with Magic Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Empire Global has no effect on the direction of Futu Holdings i.e., Futu Holdings and Magic Empire go up and down completely randomly.
Pair Corralation between Futu Holdings and Magic Empire
Given the investment horizon of 90 days Futu Holdings is expected to generate 0.86 times more return on investment than Magic Empire. However, Futu Holdings is 1.16 times less risky than Magic Empire. It trades about 0.05 of its potential returns per unit of risk. Magic Empire Global is currently generating about 0.0 per unit of risk. If you would invest 7,538 in Futu Holdings on September 3, 2024 and sell it today you would earn a total of 1,185 from holding Futu Holdings or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Futu Holdings vs. Magic Empire Global
Performance |
| Timeline |
| Futu Holdings |
| Magic Empire Global |
Futu Holdings and Magic Empire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Futu Holdings and Magic Empire
The main advantage of trading using opposite Futu Holdings and Magic Empire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futu Holdings position performs unexpectedly, Magic Empire 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 Magic Empire will offset losses from the drop in Magic Empire's long position.| Futu Holdings vs. Riot Blockchain | Futu Holdings vs. Marathon Digital Holdings | Futu Holdings vs. Applied Blockchain | Futu Holdings vs. Hut 8 Corp |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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