Correlation Between MOGU and IPower

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

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

Diversification Opportunities for MOGU and IPower

0.3

Correlation Coefficient

MOGU  IPower

Weak diversification

The 3 months correlation between MOGU and IPower is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MOGU Inc and iPower Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPower Inc and MOGU 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 are associated (or correlated) with IPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPower Inc has no effect on the direction of MOGU i.e., MOGU and IPower go up and down completely randomly.

Pair Corralation between MOGU and IPower

Given the investment horizon of 90 days MOGU Inc is expected to generate 0.66 times more return on investment than IPower. However, MOGU Inc is 1.51 times less risky than IPower. It trades about 0.02 of its potential returns per unit of risk. iPower Inc is currently generating about -0.06 per unit of risk. If you would invest  238.00  in MOGU Inc on September 1, 2024 and sell it today you would lose (16.00) from holding MOGU Inc or give up 6.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MOGU Inc  vs.  iPower Inc

MOGU Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MOGU Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, MOGU unveiled solid returns over the last few months and may actually be approaching a breakup point.

iPower Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iPower Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with MOGU and IPower

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

The idea behind MOGU Inc and iPower 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.

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 the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.