Correlation Between YY and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both YY and Meta Platforms 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 YY and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YY Inc Class and Meta Platforms, you can compare the effects of market volatilities on YY and Meta Platforms 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 YY with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Meta Platforms.
Diversification Opportunities for YY and Meta Platforms
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between YY and Meta is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and YY 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 YY Inc Class are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of YY i.e., YY and Meta Platforms go up and down completely randomly.
Pair Corralation between YY and Meta Platforms
Allowing for the 90-day total investment horizon YY is expected to generate 4.6 times less return on investment than Meta Platforms. In addition to that, YY is 1.04 times more volatile than Meta Platforms. It trades about 0.03 of its total potential returns per unit of risk. Meta Platforms is currently generating about 0.14 per unit of volatility. If you would invest 11,498 in Meta Platforms on August 29, 2024 and sell it today you would earn a total of 45,422 from holding Meta Platforms or generate 395.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YY Inc Class vs. Meta Platforms
Performance |
| Timeline |
| YY Inc Class |
| Meta Platforms |
YY and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YY and Meta Platforms
The main advantage of trading using opposite YY and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.| YY vs. Weibo Corp | YY vs. DouYu International Holdings | YY vs. Tencent Music Entertainment | YY vs. Autohome |
| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
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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