Correlation Between Meituan and Bravada Intl
Can any of the company-specific risk be diversified away by investing in both Meituan and Bravada Intl 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 Meituan and Bravada Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meituan and Bravada Intl, you can compare the effects of market volatilities on Meituan and Bravada Intl 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 Meituan with a short position of Bravada Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meituan and Bravada Intl.
Diversification Opportunities for Meituan and Bravada Intl
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Meituan and Bravada is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Meituan and Bravada Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Intl and Meituan 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 Meituan are associated (or correlated) with Bravada Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Intl has no effect on the direction of Meituan i.e., Meituan and Bravada Intl go up and down completely randomly.
Pair Corralation between Meituan and Bravada Intl
Assuming the 90 days horizon Meituan is expected to generate 0.4 times more return on investment than Bravada Intl. However, Meituan is 2.53 times less risky than Bravada Intl. It trades about 0.02 of its potential returns per unit of risk. Bravada Intl is currently generating about 0.0 per unit of risk. If you would invest 1,919 in Meituan on November 2, 2024 and sell it today you would earn a total of 79.00 from holding Meituan or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Meituan vs. Bravada Intl
Performance |
| Timeline |
| Meituan |
| Bravada Intl |
Meituan and Bravada Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meituan and Bravada Intl
The main advantage of trading using opposite Meituan and Bravada Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meituan position performs unexpectedly, Bravada Intl 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 Bravada Intl will offset losses from the drop in Bravada Intl's long position.The idea behind Meituan and Bravada Intl 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.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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