Correlation Between Kuaishou Technology and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Kuaishou Technology and Meta Platforms 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 Kuaishou Technology and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kuaishou Technology and Meta Platforms, you can compare the effects of market volatilities on Kuaishou Technology and Meta Platforms 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 Kuaishou Technology with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuaishou Technology and Meta Platforms.
Diversification Opportunities for Kuaishou Technology and Meta Platforms
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kuaishou and Meta is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kuaishou Technology and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Kuaishou Technology 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 Kuaishou Technology are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Kuaishou Technology i.e., Kuaishou Technology and Meta Platforms go up and down completely randomly.
Pair Corralation between Kuaishou Technology and Meta Platforms
Assuming the 90 days horizon Kuaishou Technology is expected to under-perform the Meta Platforms. In addition to that, Kuaishou Technology is 2.01 times more volatile than Meta Platforms. It trades about -0.05 of its total potential returns per unit of risk. Meta Platforms is currently generating about 0.05 per unit of volatility. If you would invest 56,716 in Meta Platforms on September 2, 2024 and sell it today you would earn a total of 716.00 from holding Meta Platforms or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kuaishou Technology vs. Meta Platforms
Performance |
| Timeline |
| Kuaishou Technology |
| Meta Platforms |
Kuaishou Technology and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kuaishou Technology and Meta Platforms
The main advantage of trading using opposite Kuaishou Technology and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuaishou Technology position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.| Kuaishou Technology vs. Alphabet Inc Class C | Kuaishou Technology vs. Meta Platforms | Kuaishou Technology vs. Tencent Holdings Ltd | Kuaishou Technology vs. Prosus |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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