Correlation Between Ming Le and Patterson UTI
Can any of the company-specific risk be diversified away by investing in both Ming Le and Patterson UTI 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 Patterson UTI 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 Patterson UTI Energy, you can compare the effects of market volatilities on Ming Le and Patterson UTI 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 Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and Patterson UTI.
Diversification Opportunities for Ming Le and Patterson UTI
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ming and Patterson is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and Patterson UTI Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson UTI Energy 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 Patterson UTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson UTI Energy has no effect on the direction of Ming Le i.e., Ming Le and Patterson UTI go up and down completely randomly.
Pair Corralation between Ming Le and Patterson UTI
Assuming the 90 days trading horizon Ming Le Sports is expected to generate 0.9 times more return on investment than Patterson UTI. However, Ming Le Sports is 1.11 times less risky than Patterson UTI. It trades about 0.01 of its potential returns per unit of risk. Patterson UTI Energy is currently generating about -0.05 per unit of risk. If you would invest 129.00 in Ming Le Sports on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Ming Le Sports or generate 0.0% 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. Patterson UTI Energy
Performance |
| Timeline |
| Ming Le Sports |
| Patterson UTI Energy |
Ming Le and Patterson UTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and Patterson UTI
The main advantage of trading using opposite Ming Le and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, Patterson UTI 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 Patterson UTI will offset losses from the drop in Patterson UTI's long position.The idea behind Ming Le Sports and Patterson UTI Energy 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.| Patterson UTI vs. Columbia Sportswear | Patterson UTI vs. Ming Le Sports | Patterson UTI vs. NTG Nordic Transport | Patterson UTI vs. USWE SPORTS AB |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |