Correlation Between Ming Le and Natural Health
Can any of the company-specific risk be diversified away by investing in both Ming Le and Natural Health 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 Natural Health 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 Natural Health Trends, you can compare the effects of market volatilities on Ming Le and Natural Health 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 Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and Natural Health.
Diversification Opportunities for Ming Le and Natural Health
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ming and Natural is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends 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 Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of Ming Le i.e., Ming Le and Natural Health go up and down completely randomly.
Pair Corralation between Ming Le and Natural Health
Assuming the 90 days trading horizon Ming Le is expected to generate 7.88 times less return on investment than Natural Health. But when comparing it to its historical volatility, Ming Le Sports is 1.35 times less risky than Natural Health. It trades about 0.01 of its potential returns per unit of risk. Natural Health Trends is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 246.00 in Natural Health Trends on September 12, 2024 and sell it today you would earn a total of 198.00 from holding Natural Health Trends or generate 80.49% 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. Natural Health Trends
Performance |
| Timeline |
| Ming Le Sports |
| Natural Health Trends |
Ming Le and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and Natural Health
The main advantage of trading using opposite Ming Le and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.The idea behind Ming Le Sports and Natural Health Trends 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.| Natural Health vs. Lendlease Group | Natural Health vs. FUYO GENERAL LEASE | Natural Health vs. Ares Management Corp | Natural Health vs. INVITATION HOMES DL |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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