Correlation Between Hello and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Hello 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 Hello and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hello Group and Meta Platforms, you can compare the effects of market volatilities on Hello 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 Hello with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hello and Meta Platforms.
Diversification Opportunities for Hello and Meta Platforms
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hello and Meta is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Hello 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 Hello Group 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 Hello i.e., Hello and Meta Platforms go up and down completely randomly.
Pair Corralation between Hello and Meta Platforms
Given the investment horizon of 90 days Hello Group is expected to under-perform the Meta Platforms. In addition to that, Hello is 1.35 times more volatile than Meta Platforms. It trades about 0.0 of its total potential returns per unit of risk. Meta Platforms is currently generating about 0.12 per unit of volatility. If you would invest 23,282 in Meta Platforms on August 26, 2024 and sell it today you would earn a total of 32,632 from holding Meta Platforms or generate 140.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hello Group vs. Meta Platforms
Performance |
| Timeline |
| Hello Group |
| Meta Platforms |
Hello and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hello and Meta Platforms
The main advantage of trading using opposite Hello and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hello 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.| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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