Correlation Between Fangdd Network and MDJH Old

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

By analyzing existing cross correlation between Fangdd Network Group and MDJH Old, you can compare the effects of market volatilities on Fangdd Network and MDJH Old 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 Fangdd Network with a short position of MDJH Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fangdd Network and MDJH Old.

Diversification Opportunities for Fangdd Network and MDJH Old

0.33

Correlation Coefficient

Fangdd Network  MDJH Old

Weak diversification

The 3 months correlation between Fangdd and MDJH is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fangdd Network Group and MDJH Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJH Old and Fangdd Network 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 Fangdd Network Group are associated (or correlated) with MDJH Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJH Old has no effect on the direction of Fangdd Network i.e., Fangdd Network and MDJH Old go up and down completely randomly.

Pair Corralation between Fangdd Network and MDJH Old

Considering the 90-day investment horizon Fangdd Network Group is expected to under-perform the MDJH Old. But the stock apears to be less risky and, when comparing its historical volatility, Fangdd Network Group is 4.18 times less risky than MDJH Old. The stock trades about -0.22 of its potential returns per unit of risk. The MDJH Old is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  20.00  in MDJH Old on December 28, 2024 and sell it today you would earn a total of  4.00  from holding MDJH Old or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	40.0%
Values	Daily Returns

Fangdd Network Group  vs.  MDJH Old

Fangdd Network Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fangdd Network Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

MDJH Old

Risk-Adjusted Performance

OK

Over the last 90 days MDJH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating forward-looking indicators, MDJH Old demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fangdd Network and MDJH Old

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

The idea behind Fangdd Network Group and MDJH Old 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.