Correlation Between Andrew Peller and Meta Platforms

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

By analyzing existing cross correlation between Andrew Peller Limited and Meta Platforms CDR, you can compare the effects of market volatilities on Andrew Peller and Meta Platforms 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 Andrew Peller with a short position of Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andrew Peller and Meta Platforms.

Diversification Opportunities for Andrew Peller and Meta Platforms

0.07

Correlation Coefficient

Andrew Peller  Meta Platforms

Significant diversification

The 3 months correlation between Andrew and Meta is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Andrew Peller Limited and Meta Platforms CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms CDR and Andrew Peller 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 Andrew Peller Limited are associated (or correlated) with Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms CDR has no effect on the direction of Andrew Peller i.e., Andrew Peller and Meta Platforms go up and down completely randomly.

Pair Corralation between Andrew Peller and Meta Platforms

Assuming the 90 days trading horizon Andrew Peller Limited is expected to under-perform the Meta Platforms. But the stock apears to be less risky and, when comparing its historical volatility, Andrew Peller Limited is 1.15 times less risky than Meta Platforms. The stock trades about -0.01 of its potential returns per unit of risk. The Meta Platforms CDR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,115  in Meta Platforms CDR on September 19, 2024 and sell it today you would earn a total of  324.00  from holding Meta Platforms CDR or generate 10.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Andrew Peller Limited  vs.  Meta Platforms CDR

Andrew Peller Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Meta Platforms CDR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms CDR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Meta Platforms may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Andrew Peller and Meta Platforms

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

The idea behind Andrew Peller Limited and Meta Platforms CDR 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 Global Correlations module to find global opportunities by holding instruments from different markets.