Correlation Between Fangdd Network and Magnite

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

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

Diversification Opportunities for Fangdd Network and Magnite

-0.39

Correlation Coefficient

Fangdd Network  Magnite

Very good diversification

The 3 months correlation between Fangdd and Magnite is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fangdd Network Group and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite and Fangdd Network 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 Fangdd Network Group are associated (or correlated) with Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Fangdd Network i.e., Fangdd Network and Magnite go up and down completely randomly.

Pair Corralation between Fangdd Network and Magnite

Considering the 90-day investment horizon Fangdd Network Group is expected to generate 7.7 times more return on investment than Magnite. However, Fangdd Network is 7.7 times more volatile than Magnite. It trades about 0.11 of its potential returns per unit of risk. Magnite is currently generating about 0.1 per unit of risk. If you would invest  40.00  in Fangdd Network Group on August 30, 2024 and sell it today you would earn a total of  14.02  from holding Fangdd Network Group or generate 35.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fangdd Network Group  vs.  Magnite

Fangdd Network Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fangdd Network Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Fangdd Network displayed solid returns over the last few months and may actually be approaching a breakup point.

Magnite

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magnite are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Magnite demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fangdd Network and Magnite

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

The idea behind Fangdd Network Group and Magnite 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 CEOs Directory module to screen CEOs from public companies around the world.