Correlation Between Almacenes Xito and MOGU

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

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

Diversification Opportunities for Almacenes Xito and MOGU

-0.17

Correlation Coefficient

Almacenes Xito  MOGU

Good diversification

The 3 months correlation between Almacenes and MOGU is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Almacenes xito SA and MOGU Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOGU Inc and Almacenes Xito 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 Almacenes xito SA 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 Almacenes Xito i.e., Almacenes Xito and MOGU go up and down completely randomly.

Pair Corralation between Almacenes Xito and MOGU

Given the investment horizon of 90 days Almacenes Xito is expected to generate 16.28 times less return on investment than MOGU. But when comparing it to its historical volatility, Almacenes xito SA is 2.62 times less risky than MOGU. It trades about 0.03 of its potential returns per unit of risk. MOGU Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  213.00  in MOGU Inc on September 23, 2024 and sell it today you would earn a total of  36.00  from holding MOGU Inc or generate 16.9% return on investment over 90 days.

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

Almacenes xito SA  vs.  MOGU Inc

Almacenes xito SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almacenes xito SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Almacenes Xito is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

MOGU Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOGU Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, MOGU unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Almacenes Xito and MOGU

The main advantage of trading using opposite Almacenes Xito and MOGU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Almacenes Xito 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 Almacenes xito SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.