Correlation Between Oriental Culture and Meituan
Can any of the company-specific risk be diversified away by investing in both Oriental Culture 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 Oriental Culture and Meituan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oriental Culture Holding and Meituan, you can compare the effects of market volatilities on Oriental Culture 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 Oriental Culture with a short position of Meituan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Culture and Meituan.
Diversification Opportunities for Oriental Culture and Meituan
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oriental and Meituan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Culture Holding and Meituan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan and Oriental Culture 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 Oriental Culture Holding 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 Oriental Culture i.e., Oriental Culture and Meituan go up and down completely randomly.
Pair Corralation between Oriental Culture and Meituan
Considering the 90-day investment horizon Oriental Culture Holding is expected to generate 2.19 times more return on investment than Meituan. However, Oriental Culture is 2.19 times more volatile than Meituan. It trades about -0.04 of its potential returns per unit of risk. Meituan is currently generating about -0.15 per unit of risk. If you would invest 143.00 in Oriental Culture Holding on August 25, 2024 and sell it today you would lose (15.00) from holding Oriental Culture Holding or give up 10.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oriental Culture Holding vs. Meituan
Performance |
| Timeline |
| Oriental Culture Holding |
| Meituan |
Oriental Culture and Meituan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Culture and Meituan
The main advantage of trading using opposite Oriental Culture and Meituan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Culture 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.| Oriental Culture vs. Hour Loop | Oriental Culture vs. Jowell Global | Oriental Culture vs. Qurate Retail Series | Oriental Culture vs. Emerge Commerce |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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