Correlation Between AIR PRODCHEMICALS and Ming Le
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and Ming Le 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 AIR PRODCHEMICALS and Ming Le into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Ming Le Sports, you can compare the effects of market volatilities on AIR PRODCHEMICALS and Ming Le 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 AIR PRODCHEMICALS with a short position of Ming Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Ming Le.
Diversification Opportunities for AIR PRODCHEMICALS and Ming Le
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AIR and Ming is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Ming Le Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Le Sports and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS are associated (or correlated) with Ming Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Le Sports has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Ming Le go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Ming Le
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.61 times more return on investment than Ming Le. However, AIR PRODCHEMICALS is 1.64 times less risky than Ming Le. It trades about 0.05 of its potential returns per unit of risk. Ming Le Sports is currently generating about 0.02 per unit of risk. If you would invest 24,120 in AIR PRODCHEMICALS on September 14, 2024 and sell it today you would earn a total of 5,630 from holding AIR PRODCHEMICALS or generate 23.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Ming Le Sports
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Ming Le Sports |
AIR PRODCHEMICALS and Ming Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Ming Le
The main advantage of trading using opposite AIR PRODCHEMICALS and Ming Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, Ming Le 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 Ming Le will offset losses from the drop in Ming Le's long position.| AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc | AIR PRODCHEMICALS vs. Apple Inc |
| Ming Le vs. SBA Communications Corp | Ming Le vs. INTERSHOP Communications Aktiengesellschaft | Ming Le vs. Verizon Communications | Ming Le vs. Consolidated Communications Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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