Correlation Between Full Truck and Vertex
Can any of the company-specific risk be diversified away by investing in both Full Truck and Vertex 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 Full Truck and Vertex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Full Truck Alliance and Vertex, you can compare the effects of market volatilities on Full Truck and Vertex 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 Full Truck with a short position of Vertex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Full Truck and Vertex.
Diversification Opportunities for Full Truck and Vertex
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Full and Vertex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Full Truck Alliance and Vertex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex and Full Truck 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 Full Truck Alliance are associated (or correlated) with Vertex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex has no effect on the direction of Full Truck i.e., Full Truck and Vertex go up and down completely randomly.
Pair Corralation between Full Truck and Vertex
Considering the 90-day investment horizon Full Truck is expected to generate 5.54 times less return on investment than Vertex. In addition to that, Full Truck is 1.05 times more volatile than Vertex. It trades about 0.06 of its total potential returns per unit of risk. Vertex is currently generating about 0.36 per unit of volatility. If you would invest 4,246 in Vertex on August 28, 2024 and sell it today you would earn a total of 1,242 from holding Vertex or generate 29.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Full Truck Alliance vs. Vertex
Performance |
| Timeline |
| Full Truck Alliance |
| Vertex |
Full Truck and Vertex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Full Truck and Vertex
The main advantage of trading using opposite Full Truck and Vertex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Full Truck position performs unexpectedly, Vertex 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 Vertex will offset losses from the drop in Vertex's long position.The idea behind Full Truck Alliance and Vertex 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.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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