Correlation Between MOGU and Guangdong Investment

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

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

Diversification Opportunities for MOGU and Guangdong Investment

0.68

Correlation Coefficient

MOGU  Guangdong Investment

Poor diversification

The 3 months correlation between MOGU and Guangdong is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding MOGU Inc and Guangdong Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Investment and MOGU 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 MOGU Inc are associated (or correlated) with Guangdong Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Investment has no effect on the direction of MOGU i.e., MOGU and Guangdong Investment go up and down completely randomly.

Pair Corralation between MOGU and Guangdong Investment

Given the investment horizon of 90 days MOGU Inc is expected to generate 10.1 times more return on investment than Guangdong Investment. However, MOGU is 10.1 times more volatile than Guangdong Investment Limited. It trades about 0.4 of its potential returns per unit of risk. Guangdong Investment Limited is currently generating about 0.24 per unit of risk. If you would invest  210.00  in MOGU Inc on October 26, 2024 and sell it today you would earn a total of  49.00  from holding MOGU Inc or generate 23.33% return on investment over 90 days.

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

MOGU Inc  vs.  Guangdong Investment Limited

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 abnormal technical and fundamental indicators, MOGU unveiled solid returns over the last few months and may actually be approaching a breakup point.

Guangdong Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Investment Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Guangdong Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MOGU and Guangdong Investment

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

The idea behind MOGU Inc and Guangdong Investment Limited 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.