Correlation Between Ming Le and Teck Resources
Can any of the company-specific risk be diversified away by investing in both Ming Le and Teck Resources 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 Teck Resources 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 Teck Resources Ltd, you can compare the effects of market volatilities on Ming Le and Teck Resources 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 Teck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and Teck Resources.
Diversification Opportunities for Ming Le and Teck Resources
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ming and Teck is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and Teck Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teck Resources 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 Teck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teck Resources has no effect on the direction of Ming Le i.e., Ming Le and Teck Resources go up and down completely randomly.
Pair Corralation between Ming Le and Teck Resources
Assuming the 90 days trading horizon Ming Le is expected to generate 1.16 times less return on investment than Teck Resources. In addition to that, Ming Le is 1.26 times more volatile than Teck Resources Ltd. It trades about 0.03 of its total potential returns per unit of risk. Teck Resources Ltd is currently generating about 0.04 per unit of volatility. If you would invest 3,721 in Teck Resources Ltd on September 14, 2024 and sell it today you would earn a total of 601.00 from holding Teck Resources Ltd or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ming Le Sports vs. Teck Resources Ltd
Performance |
| Timeline |
| Ming Le Sports |
| Teck Resources |
Ming Le and Teck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Le and Teck Resources
The main advantage of trading using opposite Ming Le and Teck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, Teck Resources 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 Teck Resources will offset losses from the drop in Teck Resources' 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 |
| Teck Resources vs. BHP Group Limited | Teck Resources vs. Vale SA | Teck Resources vs. Superior Plus Corp | Teck Resources vs. SIVERS SEMICONDUCTORS 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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