Correlation Between Meten Edtechx and Borqs Technologies

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

By analyzing existing cross correlation between Meten Edtechx Education and Borqs Technologies, you can compare the effects of market volatilities on Meten Edtechx and Borqs 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 Meten Edtechx with a short position of Borqs Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meten Edtechx and Borqs Technologies.

Diversification Opportunities for Meten Edtechx and Borqs Technologies

0.28

Correlation Coefficient

Meten Edtechx  Borqs Technologies

Modest diversification

The 3 months correlation between Meten and Borqs is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Meten Edtechx Education and Borqs Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borqs Technologies and Meten Edtechx 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 Meten Edtechx Education are associated (or correlated) with Borqs Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borqs Technologies has no effect on the direction of Meten Edtechx i.e., Meten Edtechx and Borqs Technologies go up and down completely randomly.

Pair Corralation between Meten Edtechx and Borqs Technologies

Given the investment horizon of 90 days Meten Edtechx is expected to generate 1.47 times less return on investment than Borqs Technologies. But when comparing it to its historical volatility, Meten Edtechx Education is 1.1 times less risky than Borqs Technologies. It trades about 0.01 of its potential returns per unit of risk. Borqs Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Borqs Technologies on September 25, 2024 and sell it today you would lose (2.00) from holding Borqs Technologies or give up 9.09% of portfolio value over 90 days.

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

Meten Edtechx Education  vs.  Borqs Technologies

Meten Edtechx Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meten Edtechx Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Meten Edtechx is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Borqs Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borqs Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Borqs Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Meten Edtechx and Borqs Technologies

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

The idea behind Meten Edtechx Education and Borqs Technologies 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.