Correlation Between Ming Shing and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Ming Shing and Diageo 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 Shing and Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ming Shing Group and Diageo PLC ADR, you can compare the effects of market volatilities on Ming Shing and Diageo 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 Shing with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Shing and Diageo PLC.
Diversification Opportunities for Ming Shing and Diageo PLC
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ming and Diageo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ming Shing Group and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and Ming Shing 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 Shing Group are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Ming Shing i.e., Ming Shing and Diageo PLC go up and down completely randomly.
Pair Corralation between Ming Shing and Diageo PLC
Considering the 90-day investment horizon Ming Shing Group is expected to generate 4.68 times more return on investment than Diageo PLC. However, Ming Shing is 4.68 times more volatile than Diageo PLC ADR. It trades about 0.25 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.1 per unit of risk. If you would invest 550.00 in Ming Shing Group on November 7, 2024 and sell it today you would earn a total of 261.00 from holding Ming Shing Group or generate 47.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ming Shing Group vs. Diageo PLC ADR
Performance |
| Timeline |
| Ming Shing Group |
| Diageo PLC ADR |
Ming Shing and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ming Shing and Diageo PLC
The main advantage of trading using opposite Ming Shing and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Shing position performs unexpectedly, Diageo 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Ming Shing vs. Mattel Inc | Ming Shing vs. Orion Office Reit | Ming Shing vs. Vornado Realty Trust | Ming Shing vs. JBG SMITH Properties |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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