Correlation Between Meituan ADR and Murata Manufacturing
Can any of the company-specific risk be diversified away by investing in both Meituan ADR and Murata Manufacturing 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 ADR and Murata Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meituan ADR and Murata Manufacturing, you can compare the effects of market volatilities on Meituan ADR and Murata Manufacturing 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 ADR with a short position of Murata Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meituan ADR and Murata Manufacturing.
Diversification Opportunities for Meituan ADR and Murata Manufacturing
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meituan and Murata is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Meituan ADR and Murata Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murata Manufacturing and Meituan ADR 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 ADR are associated (or correlated) with Murata Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murata Manufacturing has no effect on the direction of Meituan ADR i.e., Meituan ADR and Murata Manufacturing go up and down completely randomly.
Pair Corralation between Meituan ADR and Murata Manufacturing
Assuming the 90 days horizon Meituan ADR is expected to generate 2.01 times more return on investment than Murata Manufacturing. However, Meituan ADR is 2.01 times more volatile than Murata Manufacturing. It trades about 0.01 of its potential returns per unit of risk. Murata Manufacturing is currently generating about 0.0 per unit of risk. If you would invest 4,592 in Meituan ADR on September 3, 2024 and sell it today you would lose (422.00) from holding Meituan ADR or give up 9.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meituan ADR vs. Murata Manufacturing
Performance |
| Timeline |
| Meituan ADR |
| Murata Manufacturing |
Meituan ADR and Murata Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meituan ADR and Murata Manufacturing
The main advantage of trading using opposite Meituan ADR and Murata Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meituan ADR position performs unexpectedly, Murata Manufacturing 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 Murata Manufacturing will offset losses from the drop in Murata Manufacturing's long position.| Meituan ADR vs. Jd Com Inc | Meituan ADR vs. MOGU Inc | Meituan ADR vs. Oriental Culture Holding | Meituan ADR vs. Alibaba Group Holding |
| Murata Manufacturing vs. Celestica | Murata Manufacturing vs. Flex | Murata Manufacturing vs. OSI Systems | Murata Manufacturing vs. Data IO |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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