Correlation Between MGM China and MGM China

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

By analyzing existing cross correlation between MGM China Holdings and MGM China Holdings, you can compare the effects of market volatilities on MGM China and MGM China 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 MGM China with a short position of MGM China. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGM China and MGM China.

Diversification Opportunities for MGM China and MGM China

0.53

Correlation Coefficient

MGM China  MGM China

Very weak diversification

The 3 months correlation between MGM and MGM is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MGM China Holdings and MGM China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM China Holdings and MGM China 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 MGM China Holdings are associated (or correlated) with MGM China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM China Holdings has no effect on the direction of MGM China i.e., MGM China and MGM China go up and down completely randomly.

Pair Corralation between MGM China and MGM China

Assuming the 90 days horizon MGM China Holdings is expected to under-perform the MGM China. But the pink sheet apears to be less risky and, when comparing its historical volatility, MGM China Holdings is 2.04 times less risky than MGM China. The pink sheet trades about -0.01 of its potential returns per unit of risk. The MGM China Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  110.00  in MGM China Holdings on September 12, 2024 and sell it today you would lose (5.00) from holding MGM China Holdings or give up 4.55% of portfolio value over 90 days.

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

MGM China Holdings  vs.  MGM China Holdings

MGM China Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGM China Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, MGM China is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MGM China Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MGM China Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MGM China may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MGM China and MGM China

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

The idea behind MGM China Holdings and MGM China Holdings 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.