Correlation Between 6 Meridian and SOGU

Can any of the company-specific risk be diversified away by investing in both 6 Meridian and SOGU 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 6 Meridian and SOGU into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 6 Meridian Quality and SOGU, you can compare the effects of market volatilities on 6 Meridian and SOGU 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 6 Meridian with a short position of SOGU. Check out your portfolio center. Please also check ongoing floating volatility patterns of 6 Meridian and SOGU.

Diversification Opportunities for 6 Meridian and SOGU

-0.25

Correlation Coefficient

6 Meridian  SOGU

Very good diversification

The 3 months correlation between SXQG and SOGU is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding 6 Meridian Quality and SOGU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGU and 6 Meridian 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 6 Meridian Quality are associated (or correlated) with SOGU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGU has no effect on the direction of 6 Meridian i.e., 6 Meridian and SOGU go up and down completely randomly.

Pair Corralation between 6 Meridian and SOGU

If you would invest  3,115  in 6 Meridian Quality on October 15, 2024 and sell it today you would earn a total of  35.00  from holding 6 Meridian Quality or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

6 Meridian Quality  vs.  SOGU

6 Meridian Quality

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 6 Meridian Quality are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, 6 Meridian is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SOGU

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with 6 Meridian and SOGU

The main advantage of trading using opposite 6 Meridian and SOGU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 6 Meridian position performs unexpectedly, SOGU 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 SOGU will offset losses from the drop in SOGU's long position.

The idea behind 6 Meridian Quality and SOGU 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.