Correlation Between MOGU and Meituan
Can any of the company-specific risk be diversified away by investing in both MOGU and Meituan 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 MOGU and Meituan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOGU Inc and Meituan, you can compare the effects of market volatilities on MOGU and Meituan 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 MOGU with a short position of Meituan. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOGU and Meituan.
Diversification Opportunities for MOGU and Meituan
Weak diversification
The 3 months correlation between MOGU and Meituan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding MOGU Inc and Meituan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan and MOGU 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 MOGU Inc are associated (or correlated) with Meituan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meituan has no effect on the direction of MOGU i.e., MOGU and Meituan go up and down completely randomly.
Pair Corralation between MOGU and Meituan
Given the investment horizon of 90 days MOGU Inc is expected to generate 1.04 times more return on investment than Meituan. However, MOGU is 1.04 times more volatile than Meituan. It trades about 0.05 of its potential returns per unit of risk. Meituan is currently generating about -0.21 per unit of risk. If you would invest 215.00 in MOGU Inc on August 29, 2024 and sell it today you would earn a total of 5.00 from holding MOGU Inc or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOGU Inc vs. Meituan
Performance |
| Timeline |
| MOGU Inc |
| Meituan |
MOGU and Meituan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOGU and Meituan
The main advantage of trading using opposite MOGU and Meituan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOGU position performs unexpectedly, Meituan 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 Meituan will offset losses from the drop in Meituan's long position.The idea behind MOGU Inc and Meituan 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.| Meituan vs. 1StdibsCom | Meituan vs. Natural Health Trend | Meituan vs. Hour Loop | Meituan vs. Liquidity Services |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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