Correlation Between Anheuser Busch and Ming Le

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

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

Diversification Opportunities for Anheuser Busch and Ming Le

-0.66

Correlation Coefficient

Anheuser Busch  Ming Le

Excellent diversification

The 3 months correlation between Anheuser and Ming is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch InBev SANV 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 Anheuser Busch 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 Anheuser Busch InBev SANV 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 Anheuser Busch i.e., Anheuser Busch and Ming Le go up and down completely randomly.

Pair Corralation between Anheuser Busch and Ming Le

Assuming the 90 days trading horizon Anheuser Busch InBev SANV is expected to generate 0.51 times more return on investment than Ming Le. However, Anheuser Busch InBev SANV is 1.95 times less risky than Ming Le. It trades about 0.15 of its potential returns per unit of risk. Ming Le Sports is currently generating about -0.04 per unit of risk. If you would invest  4,800  in Anheuser Busch InBev SANV on December 29, 2024 and sell it today you would earn a total of  850.00  from holding Anheuser Busch InBev SANV or generate 17.71% return on investment over 90 days.

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

Anheuser Busch InBev SANV  vs.  Ming Le Sports

Anheuser Busch InBev

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anheuser Busch InBev SANV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Anheuser Busch reported solid returns over the last few months and may actually be approaching a breakup point.

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 Anheuser Busch and Ming Le

The main advantage of trading using opposite Anheuser Busch and Ming Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch 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 Anheuser Busch InBev SANV 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.