Correlation Between Futu Holdings and 10X Capital

Can any of the company-specific risk be diversified away by investing in both Futu Holdings and 10X Capital 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 Futu Holdings and 10X Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Futu Holdings and 10X Capital Venture, you can compare the effects of market volatilities on Futu Holdings and 10X Capital 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 Futu Holdings with a short position of 10X Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futu Holdings and 10X Capital.

Diversification Opportunities for Futu Holdings and 10X Capital

0.79

Correlation Coefficient

Futu Holdings  10X Capital

Poor diversification

The 3 months correlation between Futu and 10X is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Futu Holdings and 10X Capital Venture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 10X Capital Venture and Futu Holdings 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 Futu Holdings are associated (or correlated) with 10X Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 10X Capital Venture has no effect on the direction of Futu Holdings i.e., Futu Holdings and 10X Capital go up and down completely randomly.

Pair Corralation between Futu Holdings and 10X Capital

Given the investment horizon of 90 days Futu Holdings is expected to generate 15.67 times more return on investment than 10X Capital. However, Futu Holdings is 15.67 times more volatile than 10X Capital Venture. It trades about 0.2 of its potential returns per unit of risk. 10X Capital Venture is currently generating about 0.12 per unit of risk. If you would invest  5,055  in Futu Holdings on February 23, 2024 and sell it today you would earn a total of  2,604  from holding Futu Holdings or generate 51.51% return on investment over 90 days.

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

Futu Holdings  vs.  10X Capital Venture

Futu Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Futu Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Futu Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

10X Capital Venture

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 10X Capital Venture are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 10X Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Futu Holdings and 10X Capital

The main advantage of trading using opposite Futu Holdings and 10X Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futu Holdings position performs unexpectedly, 10X Capital 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 10X Capital will offset losses from the drop in 10X Capital's long position.

The idea behind Futu Holdings and 10X Capital Venture 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.