Correlation Between Iridium Communications and Meiwu Technology

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

By analyzing existing cross correlation between Iridium Communications and Meiwu Technology Co, you can compare the effects of market volatilities on Iridium Communications and Meiwu Technology 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 Iridium Communications with a short position of Meiwu Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Meiwu Technology.

Diversification Opportunities for Iridium Communications and Meiwu Technology

-0.12

Correlation Coefficient

Iridium Communications  Meiwu Technology

Good diversification

The 3 months correlation between Iridium and Meiwu is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Meiwu Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiwu Technology and Iridium Communications 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 Iridium Communications are associated (or correlated) with Meiwu Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiwu Technology has no effect on the direction of Iridium Communications i.e., Iridium Communications and Meiwu Technology go up and down completely randomly.

Pair Corralation between Iridium Communications and Meiwu Technology

Given the investment horizon of 90 days Iridium Communications is expected to generate 25.8 times less return on investment than Meiwu Technology. But when comparing it to its historical volatility, Iridium Communications is 1.43 times less risky than Meiwu Technology. It trades about 0.02 of its potential returns per unit of risk. Meiwu Technology Co is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  79.00  in Meiwu Technology Co on August 31, 2024 and sell it today you would earn a total of  21.00  from holding Meiwu Technology Co or generate 26.58% return on investment over 90 days.

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

Iridium Communications  vs.  Meiwu Technology Co

Iridium Communications

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Iridium Communications may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Meiwu Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meiwu Technology Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Meiwu Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iridium Communications and Meiwu Technology

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

The idea behind Iridium Communications and Meiwu Technology Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.