Correlation Between Ming Le and TESCO PLC
Can any of the company-specific risk be diversified away by investing in both Ming Le and TESCO PLC 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 TESCO PLC 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 TESCO PLC ADR1, you can compare the effects of market volatilities on Ming Le and TESCO PLC 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 TESCO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and TESCO PLC.
Diversification Opportunities for Ming Le and TESCO PLC
Average diversification
The 3 months correlation between Ming and TESCO is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and TESCO PLC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESCO PLC ADR1 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 TESCO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESCO PLC ADR1 has no effect on the direction of Ming Le i.e., Ming Le and TESCO PLC go up and down completely randomly.
Pair Corralation between Ming Le and TESCO PLC
Assuming the 90 days trading horizon Ming Le is expected to generate 2.06 times less return on investment than TESCO PLC. In addition to that, Ming Le is 1.69 times more volatile than TESCO PLC ADR1. It trades about 0.03 of its total potential returns per unit of risk. TESCO PLC ADR1 is currently generating about 0.09 per unit of volatility. If you would invest 910.00 in TESCO PLC ADR1 on September 14, 2024 and sell it today you would earn a total of 380.00 from holding TESCO PLC ADR1 or generate 41.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ming Le Sports vs. TESCO PLC ADR1
Performance |
| Timeline |
| Ming Le Sports |
| TESCO PLC ADR1 |
Ming Le and TESCO PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and TESCO PLC
The main advantage of trading using opposite Ming Le and TESCO PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, TESCO PLC 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 TESCO PLC will offset losses from the drop in TESCO PLC'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 |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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