Correlation Between MEITUAN UNSPADR/2B and STAG Industrial

Can any of the company-specific risk be diversified away by investing in both MEITUAN UNSPADR/2B and STAG Industrial 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 MEITUAN UNSPADR/2B and STAG Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MEITUAN UNSPADR2B and STAG Industrial, you can compare the effects of market volatilities on MEITUAN UNSPADR/2B and STAG Industrial 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 MEITUAN UNSPADR/2B with a short position of STAG Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEITUAN UNSPADR/2B and STAG Industrial.

Diversification Opportunities for MEITUAN UNSPADR/2B and STAG Industrial

0.58

Correlation Coefficient

MEITUAN UNSPADR/2B  STAG Industrial

Very weak diversification

The 3 months correlation between MEITUAN and STAG is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding MEITUAN UNSPADR2B and STAG Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial and MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR2B are associated (or correlated) with STAG Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial has no effect on the direction of MEITUAN UNSPADR/2B i.e., MEITUAN UNSPADR/2B and STAG Industrial go up and down completely randomly.

Pair Corralation between MEITUAN UNSPADR/2B and STAG Industrial

Assuming the 90 days trading horizon MEITUAN UNSPADR2B is expected to generate 3.36 times more return on investment than STAG Industrial. However, MEITUAN UNSPADR/2B is 3.36 times more volatile than STAG Industrial. It trades about 0.03 of its potential returns per unit of risk. STAG Industrial is currently generating about 0.06 per unit of risk. If you would invest  3,700  in MEITUAN UNSPADR2B on December 29, 2024 and sell it today you would earn a total of  120.00  from holding MEITUAN UNSPADR2B or generate 3.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

MEITUAN UNSPADR2B  vs.  STAG Industrial

MEITUAN UNSPADR/2B

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MEITUAN UNSPADR2B are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, MEITUAN UNSPADR/2B may actually be approaching a critical reversion point that can send shares even higher in April 2025.

STAG Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STAG Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, STAG Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MEITUAN UNSPADR/2B and STAG Industrial

The main advantage of trading using opposite MEITUAN UNSPADR/2B and STAG Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEITUAN UNSPADR/2B position performs unexpectedly, STAG Industrial 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 STAG Industrial will offset losses from the drop in STAG Industrial's long position.

The idea behind MEITUAN UNSPADR2B and STAG Industrial 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 the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.