Correlation Between Strix Group and Meituan
Can any of the company-specific risk be diversified away by investing in both Strix Group 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 Strix Group and Meituan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strix Group Plc and Meituan, you can compare the effects of market volatilities on Strix Group 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 Strix Group with a short position of Meituan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strix Group and Meituan.
Diversification Opportunities for Strix Group and Meituan
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Strix and Meituan is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Strix Group Plc and Meituan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan and Strix Group 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 Strix Group Plc 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 Strix Group i.e., Strix Group and Meituan go up and down completely randomly.
Pair Corralation between Strix Group and Meituan
Assuming the 90 days horizon Strix Group Plc is expected to under-perform the Meituan. But the stock apears to be less risky and, when comparing its historical volatility, Strix Group Plc is 1.05 times less risky than Meituan. The stock trades about -0.03 of its potential returns per unit of risk. The Meituan is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,450 in Meituan on August 28, 2024 and sell it today you would earn a total of 525.00 from holding Meituan or generate 36.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strix Group Plc vs. Meituan
Performance |
| Timeline |
| Strix Group Plc |
| Meituan |
Strix Group and Meituan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strix Group and Meituan
The main advantage of trading using opposite Strix Group and Meituan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strix Group 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.The idea behind Strix Group Plc and Meituan 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.| Meituan vs. BlueScope Steel Limited | Meituan vs. NORWEGIAN AIR SHUT | Meituan vs. DELTA AIR LINES | Meituan vs. Nippon Steel |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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