Correlation Between Meta Platforms and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Nine Dragons 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 Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Nine Dragons Paper, you can compare the effects of market volatilities on Meta Platforms and Nine Dragons 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 Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Nine Dragons.
Diversification Opportunities for Meta Platforms and Nine Dragons
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meta and Nine is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Nine Dragons Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Dragons Paper 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 Nine Dragons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Dragons Paper has no effect on the direction of Meta Platforms i.e., Meta Platforms and Nine Dragons go up and down completely randomly.
Pair Corralation between Meta Platforms and Nine Dragons
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.74 times more return on investment than Nine Dragons. However, Meta Platforms is 1.35 times less risky than Nine Dragons. It trades about 0.05 of its potential returns per unit of risk. Nine Dragons Paper is currently generating about -0.34 per unit of risk. If you would invest 56,758 in Meta Platforms on September 1, 2024 and sell it today you would earn a total of 674.00 from holding Meta Platforms or generate 1.19% 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. Nine Dragons Paper
Performance |
| Timeline |
| Meta Platforms |
| Nine Dragons Paper |
Meta Platforms and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Nine Dragons
The main advantage of trading using opposite Meta Platforms and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Nine Dragons 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 Nine Dragons will offset losses from the drop in Nine Dragons' long position.| Meta Platforms vs. MediaAlpha | Meta Platforms vs. Asset Entities Class | Meta Platforms vs. Shutterstock | Meta Platforms vs. Match Group |
| Nine Dragons vs. Canfor Pulp Products | Nine Dragons vs. Mondi PLC ADR | Nine Dragons vs. Nine Dragons Paper | Nine Dragons vs. Klabin Sa A |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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