Correlation Between Mogu Inc and Verizon Communications

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Can any of the company-specific risk be diversified away by investing in both Mogu Inc and Verizon Communications 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 Verizon Communications 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 Verizon Communications, you can compare the effects of market volatilities on Mogu Inc and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mogu Inc and Verizon Communications.

Diversification Opportunities for Mogu Inc and Verizon Communications

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Mogu Inc and Verizon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mogu Inc ADR and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Mogu Inc i.e., Mogu Inc and Verizon Communications go up and down completely randomly.

Pair Corralation between Mogu Inc and Verizon Communications

Given the investment horizon of 90 days Mogu Inc ADR is expected to under-perform the Verizon Communications. In addition to that, Mogu Inc is 5.21 times more volatile than Verizon Communications. It trades about -0.07 of its total potential returns per unit of risk. Verizon Communications is currently generating about -0.03 per unit of volatility. If you would invest  5,426  in Verizon Communications on May 18, 2022 and sell it today you would lose (846.00)  from holding Verizon Communications or give up 15.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mogu Inc ADR  vs.  Verizon Communications

 Performance (%) 
       Timeline  
Mogu Inc ADR 
Mogu Inc Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Mogu Inc ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, Mogu Inc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mogu Inc Price Channel

Verizon Communications 
Verizon Performance
0 of 100
Over the last 90 days Verizon Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Verizon Communications is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Verizon Price Channel

Mogu Inc and Verizon Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mogu Inc and Verizon Communications

The main advantage of trading using opposite Mogu Inc and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mogu Inc position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.
The idea behind Mogu Inc ADR and Verizon Communications 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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