Correlation Between Ming Le and BII Railway
Can any of the company-specific risk be diversified away by investing in both Ming Le and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Ming Le and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and BII Railway.
Diversification Opportunities for Ming Le and BII Railway
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ming and BII is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Ming Le i.e., Ming Le and BII Railway go up and down completely randomly.
Pair Corralation between Ming Le and BII Railway
Assuming the 90 days trading horizon Ming Le Sports is expected to generate 0.55 times more return on investment than BII Railway. However, Ming Le Sports is 1.83 times less risky than BII Railway. It trades about 0.01 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.0 per unit of risk. If you would invest 135.00 in Ming Le Sports on August 31, 2024 and sell it today you would earn a total of 4.00 from holding Ming Le Sports or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ming Le Sports vs. BII Railway Transportation
Performance |
| Timeline |
| Ming Le Sports |
| BII Railway Transpor |
Ming Le and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and BII Railway
The main advantage of trading using opposite Ming Le and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.The idea behind Ming Le Sports and BII Railway Transportation 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.| BII Railway vs. FUTURE GAMING GRP | BII Railway vs. ARDAGH METAL PACDL 0001 | BII Railway vs. POWER METALS | BII Railway vs. Media and Games |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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