Correlation Between Ming Le and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Ming Le and CDN IMPERIAL 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 Ming Le and CDN IMPERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ming Le Sports and CDN IMPERIAL BANK, you can compare the effects of market volatilities on Ming Le and CDN IMPERIAL 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 Ming Le with a short position of CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and CDN IMPERIAL.
Diversification Opportunities for Ming Le and CDN IMPERIAL
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ming and CDN is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK and Ming Le 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 Ming Le Sports are associated (or correlated) with CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Ming Le i.e., Ming Le and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Ming Le and CDN IMPERIAL
Assuming the 90 days trading horizon Ming Le is expected to generate 3.73 times less return on investment than CDN IMPERIAL. In addition to that, Ming Le is 1.68 times more volatile than CDN IMPERIAL BANK. It trades about 0.02 of its total potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.1 per unit of volatility. If you would invest 3,470 in CDN IMPERIAL BANK on August 27, 2024 and sell it today you would earn a total of 2,798 from holding CDN IMPERIAL BANK or generate 80.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ming Le Sports vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| Ming Le Sports |
| CDN IMPERIAL BANK |
Ming Le and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and CDN IMPERIAL
The main advantage of trading using opposite Ming Le and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.The idea behind Ming Le Sports and CDN IMPERIAL BANK 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.| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Microsoft |
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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