Correlation Between Meituan ADR and Phonex
Can any of the company-specific risk be diversified away by investing in both Meituan ADR and Phonex 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 Phonex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meituan ADR and Phonex Inc, you can compare the effects of market volatilities on Meituan ADR and Phonex 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 Phonex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meituan ADR and Phonex.
Diversification Opportunities for Meituan ADR and Phonex
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meituan and Phonex is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Meituan ADR and Phonex Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phonex Inc 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 Phonex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phonex Inc has no effect on the direction of Meituan ADR i.e., Meituan ADR and Phonex go up and down completely randomly.
Pair Corralation between Meituan ADR and Phonex
Assuming the 90 days horizon Meituan ADR is expected to generate 0.7 times more return on investment than Phonex. However, Meituan ADR is 1.42 times less risky than Phonex. It trades about 0.1 of its potential returns per unit of risk. Phonex Inc is currently generating about -0.02 per unit of risk. If you would invest 2,752 in Meituan ADR on September 1, 2024 and sell it today you would earn a total of 1,418 from holding Meituan ADR or generate 51.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meituan ADR vs. Phonex Inc
Performance |
| Timeline |
| Meituan ADR |
| Phonex Inc |
Meituan ADR and Phonex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meituan ADR and Phonex
The main advantage of trading using opposite Meituan ADR and Phonex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meituan ADR position performs unexpectedly, Phonex 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 Phonex will offset losses from the drop in Phonex's long position.| Meituan ADR vs. PDD Holdings | Meituan ADR vs. JD Inc Adr | Meituan ADR vs. Baozun Inc | Meituan ADR vs. Global E Online |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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