This module allows you to analyze existing cross correlation between Facebook and 21Vianet Group. You can compare the effects of market volatilities on Facebook and 21Vianet 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 Facebook with a short position of 21Vianet. See also your portfolio center. Please also check ongoing floating volatility patterns of Facebook and 21Vianet.
Allowing for the 30-days total investment horizon, Facebook is expected to generate 1.46 times more return on investment than 21Vianet. However, Facebook is 1.46 times more volatile than 21Vianet Group. It trades about -0.18 of its potential returns per unit of risk. 21Vianet Group is currently generating about -0.29 per unit of risk. If you would invest 20,994 in Facebook on July 20, 2018 and sell it today you would lose (3,614) from holding Facebook or give up 17.21% of portfolio value over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Facebook Inc and 21Vianet Group Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on 21Vianet Group and Facebook 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 Facebook are associated (or correlated) with 21Vianet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Vianet Group has no effect on the direction of Facebook i.e. Facebook and 21Vianet go up and down completely randomly.
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