Correlation Between Meta Platforms and Hello
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Hello 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 Meta Platforms and Hello into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Hello Group, you can compare the effects of market volatilities on Meta Platforms and Hello 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 Meta Platforms with a short position of Hello. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Hello.
Diversification Opportunities for Meta Platforms and Hello
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meta and Hello is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Hello Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hello Group and Meta Platforms 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 Meta Platforms are associated (or correlated) with Hello. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hello Group has no effect on the direction of Meta Platforms i.e., Meta Platforms and Hello go up and down completely randomly.
Pair Corralation between Meta Platforms and Hello
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.73 times more return on investment than Hello. However, Meta Platforms is 1.38 times less risky than Hello. It trades about 0.14 of its potential returns per unit of risk. Hello Group is currently generating about 0.03 per unit of risk. If you would invest 11,498 in Meta Platforms on August 29, 2024 and sell it today you would earn a total of 45,422 from holding Meta Platforms or generate 395.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. Hello Group
Performance |
| Timeline |
| Meta Platforms |
| Hello Group |
Meta Platforms and Hello Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Hello
The main advantage of trading using opposite Meta Platforms and Hello positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Hello 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 Hello will offset losses from the drop in Hello's long position.| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |