Correlation Between RMR and Fangdd Network
Can any of the company-specific risk be diversified away by investing in both RMR and Fangdd Network 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 RMR and Fangdd Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RMR Group and Fangdd Network Group, you can compare the effects of market volatilities on RMR and Fangdd Network 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 RMR with a short position of Fangdd Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMR and Fangdd Network.
Diversification Opportunities for RMR and Fangdd Network
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RMR and Fangdd is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding RMR Group and Fangdd Network Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fangdd Network Group and RMR 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 RMR Group are associated (or correlated) with Fangdd Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fangdd Network Group has no effect on the direction of RMR i.e., RMR and Fangdd Network go up and down completely randomly.
Pair Corralation between RMR and Fangdd Network
Considering the 90-day investment horizon RMR Group is expected to generate 0.2 times more return on investment than Fangdd Network. However, RMR Group is 5.06 times less risky than Fangdd Network. It trades about -0.15 of its potential returns per unit of risk. Fangdd Network Group is currently generating about -0.28 per unit of risk. If you would invest 2,359 in RMR Group on September 2, 2024 and sell it today you would lose (139.00) from holding RMR Group or give up 5.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RMR Group vs. Fangdd Network Group
Performance |
| Timeline |
| RMR Group |
| Fangdd Network Group |
RMR and Fangdd Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RMR and Fangdd Network
The main advantage of trading using opposite RMR and Fangdd Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RMR position performs unexpectedly, Fangdd Network 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 Fangdd Network will offset losses from the drop in Fangdd Network's long position.The idea behind RMR Group and Fangdd Network Group 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.| Fangdd Network vs. MDJM | Fangdd Network vs. Southcorp Capital | Fangdd Network vs. Frp Holdings Ord | Fangdd Network vs. Ucommune International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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