Correlation Between Ming Le and Expedia
Can any of the company-specific risk be diversified away by investing in both Ming Le and Expedia 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 Expedia 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 Expedia Group, you can compare the effects of market volatilities on Ming Le and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and Expedia.
Diversification Opportunities for Ming Le and Expedia
Very weak diversification
The 3 months correlation between Ming and Expedia is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Ming Le i.e., Ming Le and Expedia go up and down completely randomly.
Pair Corralation between Ming Le and Expedia
Assuming the 90 days trading horizon Ming Le is expected to generate 6.36 times less return on investment than Expedia. But when comparing it to its historical volatility, Ming Le Sports is 1.17 times less risky than Expedia. It trades about 0.01 of its potential returns per unit of risk. Expedia Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,916 in Expedia Group on August 31, 2024 and sell it today you would earn a total of 7,498 from holding Expedia Group or generate 75.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ming Le Sports vs. Expedia Group
Performance |
| Timeline |
| Ming Le Sports |
| Expedia Group |
Ming Le and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and Expedia
The main advantage of trading using opposite Ming Le and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia's long position.The idea behind Ming Le Sports and Expedia Group 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.| Expedia vs. Ming Le Sports | Expedia vs. Sporttotal AG | Expedia vs. Ares Management Corp | Expedia vs. Jupiter Fund Management |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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