Correlation Between Chevron and Ming Le
Can any of the company-specific risk be diversified away by investing in both Chevron 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 Chevron and Ming Le into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron and Ming Le Sports, you can compare the effects of market volatilities on Chevron 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 Chevron with a short position of Ming Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron and Ming Le.
Diversification Opportunities for Chevron and Ming Le
Very poor diversification
The 3 months correlation between Chevron and Ming is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chevron 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 Chevron 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 Chevron 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 Chevron i.e., Chevron and Ming Le go up and down completely randomly.
Pair Corralation between Chevron and Ming Le
Assuming the 90 days trading horizon Chevron is expected to generate 9.01 times less return on investment than Ming Le. But when comparing it to its historical volatility, Chevron is 7.56 times less risky than Ming Le. It trades about 0.11 of its potential returns per unit of risk. Ming Le Sports is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 100.00 in Ming Le Sports on September 13, 2024 and sell it today you would earn a total of 19.00 from holding Ming Le Sports or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron vs. Ming Le Sports
Performance |
| Timeline |
| Chevron |
| Ming Le Sports |
Chevron and Ming Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron and Ming Le
The main advantage of trading using opposite Chevron and Ming Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron 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.| Chevron vs. Transport International Holdings | Chevron vs. Gaztransport Technigaz SA | Chevron vs. LIFEWAY FOODS | Chevron vs. Gold Road Resources |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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