Correlation Between Chuangs China and Ming Le
Can any of the company-specific risk be diversified away by investing in both Chuangs China 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 Chuangs China and Ming Le into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and Ming Le Sports, you can compare the effects of market volatilities on Chuangs China 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 Chuangs China with a short position of Ming Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Ming Le.
Diversification Opportunities for Chuangs China and Ming Le
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chuangs and Ming is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments 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 Chuangs China 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 Chuangs China Investments 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 Chuangs China i.e., Chuangs China and Ming Le go up and down completely randomly.
Pair Corralation between Chuangs China and Ming Le
Assuming the 90 days horizon Chuangs China is expected to generate 155.06 times less return on investment than Ming Le. But when comparing it to its historical volatility, Chuangs China Investments is 5.78 times less risky than Ming Le. It trades about 0.0 of its potential returns per unit of risk. Ming Le Sports is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 104.00 in Ming Le Sports on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Ming Le Sports or generate 33.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. Ming Le Sports
Performance |
| Timeline |
| Chuangs China Investments |
| Ming Le Sports |
Chuangs China and Ming Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Ming Le
The main advantage of trading using opposite Chuangs China and Ming Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China 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.| Chuangs China vs. Treasury Wine Estates | Chuangs China vs. GigaMedia | Chuangs China vs. NAKED WINES PLC | Chuangs China vs. Tencent Music Entertainment |
| Ming Le vs. Sqs Software Quality | Ming Le vs. Burlington Stores | Ming Le vs. VITEC SOFTWARE GROUP | Ming Le vs. Take Two Interactive Software |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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