Correlation Between Ming Le and SECURITAS
Can any of the company-specific risk be diversified away by investing in both Ming Le and SECURITAS 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 SECURITAS 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 SECURITAS B , you can compare the effects of market volatilities on Ming Le and SECURITAS 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 SECURITAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and SECURITAS.
Diversification Opportunities for Ming Le and SECURITAS
Very poor diversification
The 3 months correlation between Ming and SECURITAS is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and SECURITAS B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECURITAS B 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 SECURITAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECURITAS B has no effect on the direction of Ming Le i.e., Ming Le and SECURITAS go up and down completely randomly.
Pair Corralation between Ming Le and SECURITAS
Assuming the 90 days trading horizon Ming Le Sports is expected to generate 1.86 times more return on investment than SECURITAS. However, Ming Le is 1.86 times more volatile than SECURITAS B . It trades about 0.18 of its potential returns per unit of risk. SECURITAS B is currently generating about 0.2 per unit of risk. If you would invest 100.00 in Ming Le Sports on September 12, 2024 and sell it today you would earn a total of 29.00 from holding Ming Le Sports or generate 29.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ming Le Sports vs. SECURITAS B
Performance |
| Timeline |
| Ming Le Sports |
| SECURITAS B |
Ming Le and SECURITAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and SECURITAS
The main advantage of trading using opposite Ming Le and SECURITAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, SECURITAS 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 SECURITAS will offset losses from the drop in SECURITAS's long position.The idea behind Ming Le Sports and SECURITAS B 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.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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