Correlation Between Ming Le and Chuangs China
Can any of the company-specific risk be diversified away by investing in both Ming Le and Chuangs China 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 Chuangs China 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 Chuangs China Investments, you can compare the effects of market volatilities on Ming Le and Chuangs China 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 Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and Chuangs China.
Diversification Opportunities for Ming Le and Chuangs China
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ming and Chuangs is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments 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 Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of Ming Le i.e., Ming Le and Chuangs China go up and down completely randomly.
Pair Corralation between Ming Le and Chuangs China
Assuming the 90 days trading horizon Ming Le Sports is expected to generate 0.43 times more return on investment than Chuangs China. However, Ming Le Sports is 2.3 times less risky than Chuangs China. It trades about 0.02 of its potential returns per unit of risk. Chuangs China Investments is currently generating about 0.01 per unit of risk. If you would invest 129.00 in Ming Le Sports on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Ming Le Sports or generate 7.75% 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. Chuangs China Investments
Performance |
| Timeline |
| Ming Le Sports |
| Chuangs China Investments |
Ming Le and Chuangs China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and Chuangs China
The main advantage of trading using opposite Ming Le and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China's long position.| Ming Le vs. Sqs Software Quality | Ming Le vs. Burlington Stores | Ming Le vs. VITEC SOFTWARE GROUP | Ming Le vs. Take Two Interactive Software |
| Chuangs China vs. Treasury Wine Estates | Chuangs China vs. GigaMedia | Chuangs China vs. NAKED WINES PLC | Chuangs China vs. Tencent Music Entertainment |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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