Correlation Between LQwD FinTech and MMTEC

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

By analyzing existing cross correlation between LQwD FinTech Corp and MMTEC Inc, you can compare the effects of market volatilities on LQwD FinTech and MMTEC 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 LQwD FinTech with a short position of MMTEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LQwD FinTech and MMTEC.

Diversification Opportunities for LQwD FinTech and MMTEC

-0.1

Correlation Coefficient

LQwD FinTech  MMTEC

Good diversification

The 3 months correlation between LQwD and MMTEC is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding LQwD FinTech Corp and MMTEC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMTEC Inc and LQwD FinTech 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 LQwD FinTech Corp are associated (or correlated) with MMTEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMTEC Inc has no effect on the direction of LQwD FinTech i.e., LQwD FinTech and MMTEC go up and down completely randomly.

Pair Corralation between LQwD FinTech and MMTEC

Assuming the 90 days horizon LQwD FinTech Corp is expected to generate 0.66 times more return on investment than MMTEC. However, LQwD FinTech Corp is 1.51 times less risky than MMTEC. It trades about 0.21 of its potential returns per unit of risk. MMTEC Inc is currently generating about 0.04 per unit of risk. If you would invest  44.00  in LQwD FinTech Corp on September 1, 2024 and sell it today you would earn a total of  64.00  from holding LQwD FinTech Corp or generate 145.45% return on investment over 90 days.

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

LQwD FinTech Corp  vs.  MMTEC Inc

LQwD FinTech Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LQwD FinTech Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, LQwD FinTech reported solid returns over the last few months and may actually be approaching a breakup point.

MMTEC Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MMTEC Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, MMTEC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LQwD FinTech and MMTEC

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

The idea behind LQwD FinTech Corp and MMTEC Inc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.