Correlation Between Phonex and Meituan ADR
Can any of the company-specific risk be diversified away by investing in both Phonex and Meituan ADR 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 Phonex and Meituan ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phonex Inc and Meituan ADR, you can compare the effects of market volatilities on Phonex and Meituan ADR 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 Phonex with a short position of Meituan ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phonex and Meituan ADR.
Diversification Opportunities for Phonex and Meituan ADR
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Phonex and Meituan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Phonex Inc and Meituan ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meituan ADR and Phonex 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 Phonex Inc are associated (or correlated) with Meituan ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meituan ADR has no effect on the direction of Phonex i.e., Phonex and Meituan ADR go up and down completely randomly.
Pair Corralation between Phonex and Meituan ADR
Given the investment horizon of 90 days Phonex Inc is expected to generate 2.22 times more return on investment than Meituan ADR. However, Phonex is 2.22 times more volatile than Meituan ADR. It trades about 0.14 of its potential returns per unit of risk. Meituan ADR is currently generating about 0.1 per unit of risk. If you would invest 96.00 in Phonex Inc on March 12, 2024 and sell it today you would earn a total of 57.00 from holding Phonex Inc or generate 59.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Phonex Inc vs. Meituan ADR
Performance |
Timeline |
Phonex Inc |
Meituan ADR |
Phonex and Meituan ADR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Phonex and Meituan ADR
The main advantage of trading using opposite Phonex and Meituan ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phonex position performs unexpectedly, Meituan ADR 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 Meituan ADR will offset losses from the drop in Meituan ADR's long position.Phonex vs. Alibaba Group Holding | Phonex vs. JD Inc Adr | Phonex vs. Dada Nexus | Phonex vs. Qurate Retail Series |
Meituan ADR vs. Alibaba Group Holding | Meituan ADR vs. JD Inc Adr | Meituan ADR vs. Dada Nexus | Meituan ADR vs. Qurate Retail Series |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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