Correlation Between WeTrade Group and Movella Holdings

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

By analyzing existing cross correlation between WeTrade Group Ordinary and Movella Holdings, you can compare the effects of market volatilities on WeTrade Group and Movella Holdings 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 WeTrade Group with a short position of Movella Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of WeTrade Group and Movella Holdings.

Diversification Opportunities for WeTrade Group and Movella Holdings

0.59

Correlation Coefficient

WeTrade Group  Movella Holdings

Very weak diversification

The 3 months correlation between WeTrade and Movella is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding WeTrade Group Ordinary and Movella Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Movella Holdings and WeTrade Group 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 WeTrade Group Ordinary are associated (or correlated) with Movella Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Movella Holdings has no effect on the direction of WeTrade Group i.e., WeTrade Group and Movella Holdings go up and down completely randomly.

Pair Corralation between WeTrade Group and Movella Holdings

Given the investment horizon of 90 days WeTrade Group Ordinary is expected to generate 1.42 times more return on investment than Movella Holdings. However, WeTrade Group is 1.42 times more volatile than Movella Holdings. It trades about -0.04 of its potential returns per unit of risk. Movella Holdings is currently generating about -0.09 per unit of risk. If you would invest  6,290  in WeTrade Group Ordinary on September 20, 2024 and sell it today you would lose (6,290) from holding WeTrade Group Ordinary or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	39.39%
Values	Daily Returns

WeTrade Group Ordinary  vs.  Movella Holdings

WeTrade Group Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WeTrade Group Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WeTrade Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Movella Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Movella Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Movella Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WeTrade Group and Movella Holdings

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

The idea behind WeTrade Group Ordinary and Movella Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.