Correlation Between Natural Health and MOGU

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

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

Diversification Opportunities for Natural Health and MOGU

-0.55

Correlation Coefficient

Natural Health  MOGU

Excellent diversification

The 3 months correlation between Natural and MOGU is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trend and MOGU Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOGU Inc and Natural Health 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 Natural Health Trend 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 Natural Health i.e., Natural Health and MOGU go up and down completely randomly.

Pair Corralation between Natural Health and MOGU

Given the investment horizon of 90 days Natural Health Trend is expected to under-perform the MOGU. But the stock apears to be less risky and, when comparing its historical volatility, Natural Health Trend is 2.1 times less risky than MOGU. The stock trades about -0.11 of its potential returns per unit of risk. The MOGU Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  204.00  in MOGU Inc on September 1, 2024 and sell it today you would earn a total of  18.00  from holding MOGU Inc or generate 8.82% return on investment over 90 days.

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

Natural Health Trend  vs.  MOGU Inc

Natural Health Trend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MOGU Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MOGU Inc are ranked lower than 3 (%) 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 Natural Health and MOGU

The main advantage of trading using opposite Natural Health and MOGU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health 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 Natural Health Trend 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.