Correlation Between Full Truck and MCloud Technologies

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

By analyzing existing cross correlation between Full Truck Alliance and MCloud Technologies Corp, you can compare the effects of market volatilities on Full Truck and MCloud Technologies 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 Full Truck with a short position of MCloud Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Full Truck and MCloud Technologies.

Diversification Opportunities for Full Truck and MCloud Technologies

-0.72

Correlation Coefficient

Full Truck  MCloud Technologies

Pay attention - limited upside

The 3 months correlation between Full and MCloud is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Full Truck Alliance and MCloud Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCloud Technologies Corp and Full Truck 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 Full Truck Alliance are associated (or correlated) with MCloud Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCloud Technologies Corp has no effect on the direction of Full Truck i.e., Full Truck and MCloud Technologies go up and down completely randomly.

Pair Corralation between Full Truck and MCloud Technologies

Considering the 90-day investment horizon Full Truck is expected to generate 29.26 times less return on investment than MCloud Technologies. But when comparing it to its historical volatility, Full Truck Alliance is 16.03 times less risky than MCloud Technologies. It trades about 0.04 of its potential returns per unit of risk. MCloud Technologies Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  217.00  in MCloud Technologies Corp on February 4, 2024 and sell it today you would lose (216.90) from holding MCloud Technologies Corp or give up 99.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	78.79%
Values	Daily Returns

Full Truck Alliance  vs.  MCloud Technologies Corp

Full Truck Alliance

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Full Truck Alliance are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Full Truck displayed solid returns over the last few months and may actually be approaching a breakup point.

MCloud Technologies Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCloud Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, MCloud Technologies is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Full Truck and MCloud Technologies

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

The idea behind Full Truck Alliance and MCloud Technologies Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.