Correlation Between Chindata Group and Meta Platforms

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Can any of the company-specific risk be diversified away by investing in both Chindata Group 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 Chindata Group and Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chindata Group Holdings and Meta Platforms, you can compare the effects of market volatilities on Chindata Group 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 Chindata Group with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chindata Group and Meta Platforms.

Diversification Opportunities for Chindata Group and Meta Platforms

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Chindata and Meta Platforms is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chindata Group Holdings and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms and Chindata 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 Chindata Group Holdings 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 Chindata Group i.e., Chindata Group and Meta Platforms go up and down completely randomly.

Pair Corralation between Chindata Group and Meta Platforms

Allowing for the 90-day total investment horizon Chindata Group Holdings is expected to generate 1.04 times more return on investment than Meta Platforms. However, Chindata Group is 1.04 times more volatile than Meta Platforms. It trades about 0.28 of its potential returns per unit of risk. Meta Platforms is currently generating about 0.06 per unit of risk. If you would invest  485.00  in Chindata Group Holdings on February 22, 2022 and sell it today you would earn a total of  160.00  from holding Chindata Group Holdings or generate 32.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Chindata Group Holdings  vs.  Meta Platforms

 Performance (%) 
      Timeline 
Chindata Group Holdings 
Chindata Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chindata Group Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Chindata Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chindata Price Channel

Meta Platforms 
Meta Platforms Performance
0 of 100
Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Meta Platforms is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Meta Platforms Price Channel

Chindata Group and Meta Platforms Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Chindata Group and Meta Platforms

The main advantage of trading using opposite Chindata Group and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chindata Group 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.
The idea behind Chindata Group Holdings and Meta Platforms 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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