Correlation Between Mogu Inc and Mercadolibre

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Can any of the company-specific risk be diversified away by investing in both Mogu Inc and Mercadolibre 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 Inc and Mercadolibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mogu Inc ADR and Mercadolibre, you can compare the effects of market volatilities on Mogu Inc and Mercadolibre 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 Inc with a short position of Mercadolibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mogu Inc and Mercadolibre.

Diversification Opportunities for Mogu Inc and Mercadolibre

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Mogu Inc and Mercadolibre is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mogu Inc ADR and Mercadolibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercadolibre and Mogu Inc 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 ADR are associated (or correlated) with Mercadolibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercadolibre has no effect on the direction of Mogu Inc i.e., Mogu Inc and Mercadolibre go up and down completely randomly.

Pair Corralation between Mogu Inc and Mercadolibre

Given the investment horizon of 90 days Mogu Inc ADR is expected to generate 1.32 times more return on investment than Mercadolibre. However, Mogu Inc is 1.32 times more volatile than Mercadolibre. It trades about -0.11 of its potential returns per unit of risk. Mercadolibre is currently generating about -0.19 per unit of risk. If you would invest  241.00  in Mogu Inc ADR on February 25, 2022 and sell it today you would lose (65.00)  from holding Mogu Inc ADR or give up 26.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Mogu Inc ADR  vs.  Mercadolibre

 Performance (%) 
      Timeline 
Mogu Inc ADR 
Mogu Inc Performance
0 of 100
Over the last 90 days Mogu Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mogu Inc Price Channel

Mercadolibre 
Mercadolibre Performance
0 of 100
Over the last 90 days Mercadolibre has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Mercadolibre Price Channel

Mogu Inc and Mercadolibre Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Mogu Inc and Mercadolibre

The main advantage of trading using opposite Mogu Inc and Mercadolibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mogu Inc position performs unexpectedly, Mercadolibre 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 Mercadolibre will offset losses from the drop in Mercadolibre's long position.
The idea behind Mogu Inc ADR and Mercadolibre 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.
Check out your portfolio center. 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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