Correlation Between Farfetch and MOGU

Can any of the company-specific risk be diversified away by investing in both Farfetch and MOGU 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 Farfetch and MOGU into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Farfetch Ltd Class and MOGU Inc, you can compare the effects of market volatilities on Farfetch and MOGU 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 Farfetch with a short position of MOGU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farfetch and MOGU.

Diversification Opportunities for Farfetch and MOGU

0.25

Correlation Coefficient

Farfetch  MOGU

Modest diversification

The 3 months correlation between Farfetch and MOGU is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Farfetch Ltd Class and MOGU Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOGU Inc and Farfetch 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 Farfetch Ltd Class are associated (or correlated) with MOGU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOGU Inc has no effect on the direction of Farfetch i.e., Farfetch and MOGU go up and down completely randomly.

Pair Corralation between Farfetch and MOGU

If you would invest  2.10  in Farfetch Ltd Class on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Farfetch Ltd Class or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Farfetch Ltd Class  vs.  MOGU Inc

Farfetch Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Farfetch Ltd Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

MOGU Inc

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MOGU Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MOGU is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Farfetch and MOGU

The main advantage of trading using opposite Farfetch and MOGU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farfetch position performs unexpectedly, MOGU 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 MOGU will offset losses from the drop in MOGU's long position.

The idea behind Farfetch Ltd Class and MOGU Inc 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.