Correlation Between MGM China and Century Casinos
Can any of the company-specific risk be diversified away by investing in both MGM China and Century Casinos 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 MGM China and Century Casinos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGM China Holdings and Century Casinos, you can compare the effects of market volatilities on MGM China and Century Casinos 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 MGM China with a short position of Century Casinos. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM China and Century Casinos.
Diversification Opportunities for MGM China and Century Casinos
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MGM and Century is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding MGM China Holdings and Century Casinos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Casinos and MGM 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 MGM China Holdings are associated (or correlated) with Century Casinos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Casinos has no effect on the direction of MGM China i.e., MGM China and Century Casinos go up and down completely randomly.
Pair Corralation between MGM China and Century Casinos
Assuming the 90 days horizon MGM China Holdings is expected to under-perform the Century Casinos. In addition to that, MGM China is 1.16 times more volatile than Century Casinos. It trades about -0.21 of its total potential returns per unit of risk. Century Casinos is currently generating about 0.43 per unit of volatility. If you would invest 294.00 in Century Casinos on August 25, 2024 and sell it today you would earn a total of 145.00 from holding Century Casinos or generate 49.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MGM China Holdings vs. Century Casinos
Performance |
| Timeline |
| MGM China Holdings |
| Century Casinos |
MGM China and Century Casinos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGM China and Century Casinos
The main advantage of trading using opposite MGM China and Century Casinos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGM China position performs unexpectedly, Century Casinos 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 Century Casinos will offset losses from the drop in Century Casinos' long position.| MGM China vs. Banyan Tree Holdings | MGM China vs. Nagacorp | MGM China vs. Wynn Macau | MGM China vs. Table Trac |
| Century Casinos vs. Golden Entertainment | Century Casinos vs. Monarch Casino Resort | Century Casinos vs. Red Rock Resorts | Century Casinos vs. Studio City International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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