Correlation Between SWISS WATER and Ming Le

Can any of the company-specific risk be diversified away by investing in both SWISS WATER and Ming Le 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 SWISS WATER and Ming Le into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and Ming Le Sports, you can compare the effects of market volatilities on SWISS WATER and Ming Le 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 SWISS WATER with a short position of Ming Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and Ming Le.

Diversification Opportunities for SWISS WATER and Ming Le

0.69

Correlation Coefficient

SWISS WATER  Ming Le

Poor diversification

The 3 months correlation between SWISS and Ming is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and Ming Le Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Le Sports and SWISS WATER 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 SWISS WATER DECAFFCOFFEE are associated (or correlated) with Ming Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Le Sports has no effect on the direction of SWISS WATER i.e., SWISS WATER and Ming Le go up and down completely randomly.

Pair Corralation between SWISS WATER and Ming Le

Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to under-perform the Ming Le. But the stock apears to be less risky and, when comparing its historical volatility, SWISS WATER DECAFFCOFFEE is 1.16 times less risky than Ming Le. The stock trades about -0.1 of its potential returns per unit of risk. The Ming Le Sports is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  119.00  in Ming Le Sports on December 28, 2024 and sell it today you would lose (15.00) from holding Ming Le Sports or give up 12.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SWISS WATER DECAFFCOFFEE  vs.  Ming Le Sports

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWISS WATER DECAFFCOFFEE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ming Le Sports

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ming Le Sports has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SWISS WATER and Ming Le

The main advantage of trading using opposite SWISS WATER and Ming Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER position performs unexpectedly, Ming Le 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 Ming Le will offset losses from the drop in Ming Le's long position.

The idea behind SWISS WATER DECAFFCOFFEE and Ming Le Sports 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.