Correlation Between Ming Le and Metso Outotec
Can any of the company-specific risk be diversified away by investing in both Ming Le and Metso Outotec 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 Metso Outotec 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 Metso Outotec Oyj, you can compare the effects of market volatilities on Ming Le and Metso Outotec 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 Metso Outotec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and Metso Outotec.
Diversification Opportunities for Ming Le and Metso Outotec
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ming and Metso is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and Metso Outotec Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metso Outotec Oyj 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 Metso Outotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metso Outotec Oyj has no effect on the direction of Ming Le i.e., Ming Le and Metso Outotec go up and down completely randomly.
Pair Corralation between Ming Le and Metso Outotec
Assuming the 90 days trading horizon Ming Le is expected to generate 1.0 times less return on investment than Metso Outotec. In addition to that, Ming Le is 3.37 times more volatile than Metso Outotec Oyj. It trades about 0.07 of its total potential returns per unit of risk. Metso Outotec Oyj is currently generating about 0.25 per unit of volatility. If you would invest 839.00 in Metso Outotec Oyj on September 14, 2024 and sell it today you would earn a total of 76.00 from holding Metso Outotec Oyj or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ming Le Sports vs. Metso Outotec Oyj
Performance |
| Timeline |
| Ming Le Sports |
| Metso Outotec Oyj |
Ming Le and Metso Outotec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and Metso Outotec
The main advantage of trading using opposite Ming Le and Metso Outotec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, Metso Outotec 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 Metso Outotec will offset losses from the drop in Metso Outotec's long position.| Ming Le vs. SBA Communications Corp | Ming Le vs. INTERSHOP Communications Aktiengesellschaft | Ming Le vs. Verizon Communications | Ming Le vs. Consolidated Communications Holdings |
| Metso Outotec vs. Gladstone Investment | Metso Outotec vs. MGIC INVESTMENT | Metso Outotec vs. Nippon Steel | Metso Outotec vs. Insteel Industries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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