Correlation Between Ming Le and EHEALTH
Can any of the company-specific risk be diversified away by investing in both Ming Le and EHEALTH 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 EHEALTH 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 EHEALTH, you can compare the effects of market volatilities on Ming Le and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and EHEALTH.
Diversification Opportunities for Ming Le and EHEALTH
Poor diversification
The 3 months correlation between Ming and EHEALTH is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of Ming Le i.e., Ming Le and EHEALTH go up and down completely randomly.
Pair Corralation between Ming Le and EHEALTH
Assuming the 90 days trading horizon Ming Le is expected to generate 6.53 times less return on investment than EHEALTH. But when comparing it to its historical volatility, Ming Le Sports is 2.29 times less risky than EHEALTH. It trades about 0.01 of its potential returns per unit of risk. EHEALTH is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 479.00 in EHEALTH on September 12, 2024 and sell it today you would earn a total of 40.00 from holding EHEALTH or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ming Le Sports vs. EHEALTH
Performance |
| Timeline |
| Ming Le Sports |
| EHEALTH |
Ming Le and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and EHEALTH
The main advantage of trading using opposite Ming Le and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.The idea behind Ming Le Sports and EHEALTH 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.| EHEALTH vs. PREMIER FOODS | EHEALTH vs. Commonwealth Bank of | EHEALTH vs. ASSOC BR FOODS | EHEALTH vs. Thai Beverage Public |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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