Correlation Between MOGU and Group 1

Can any of the company-specific risk be diversified away by investing in both MOGU and Group 1 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 Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MOGU Inc and Group 1 Automotive, you can compare the effects of market volatilities on MOGU and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOGU and Group 1.

Diversification Opportunities for MOGU and Group 1

0.25

Correlation Coefficient

MOGU  Group 1

Modest diversification

The 3 months correlation between MOGU and Group is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MOGU Inc and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of MOGU i.e., MOGU and Group 1 go up and down completely randomly.

Pair Corralation between MOGU and Group 1

Given the investment horizon of 90 days MOGU Inc is expected to under-perform the Group 1. In addition to that, MOGU is 1.99 times more volatile than Group 1 Automotive. It trades about -0.04 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about -0.03 per unit of volatility. If you would invest  41,056  in Group 1 Automotive on December 18, 2024 and sell it today you would lose (1,838) from holding Group 1 Automotive or give up 4.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

MOGU Inc  vs.  Group 1 Automotive

MOGU Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days MOGU Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Group 1 Automotive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Group 1 Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Group 1 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MOGU and Group 1

The main advantage of trading using opposite MOGU and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOGU position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.

The idea behind MOGU Inc and Group 1 Automotive 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.