Correlation Between MACOM Technology and MOGU

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

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

Diversification Opportunities for MACOM Technology and MOGU

0.07

Correlation Coefficient

MACOM Technology  MOGU

Significant diversification

The 3 months correlation between MACOM and MOGU is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions and MOGU Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOGU Inc and MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and MOGU go up and down completely randomly.

Pair Corralation between MACOM Technology and MOGU

Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 0.65 times more return on investment than MOGU. However, MACOM Technology Solutions is 1.54 times less risky than MOGU. It trades about 0.11 of its potential returns per unit of risk. MOGU Inc is currently generating about 0.07 per unit of risk. If you would invest  11,396  in MACOM Technology Solutions on October 10, 2024 and sell it today you would earn a total of  2,149  from holding MACOM Technology Solutions or generate 18.86% return on investment over 90 days.

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

MACOM Technology Solutions  vs.  MOGU Inc

MACOM Technology Sol

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MACOM Technology Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, MACOM Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MOGU Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MOGU Inc are ranked lower than 5 (%) 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.

Pair Trading with MACOM Technology and MOGU

The main advantage of trading using opposite MACOM Technology and MOGU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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 MACOM Technology Solutions 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 CEOs Directory module to screen CEOs from public companies around the world.