Correlation Between Ming Le and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Ming Le and Sunny Optical 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 Sunny Optical 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 Sunny Optical Technology, you can compare the effects of market volatilities on Ming Le and Sunny Optical 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 Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and Sunny Optical.
Diversification Opportunities for Ming Le and Sunny Optical
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ming and Sunny is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of Ming Le i.e., Ming Le and Sunny Optical go up and down completely randomly.
Pair Corralation between Ming Le and Sunny Optical
Assuming the 90 days trading horizon Ming Le is expected to generate 2.61 times less return on investment than Sunny Optical. But when comparing it to its historical volatility, Ming Le Sports is 1.21 times less risky than Sunny Optical. It trades about 0.08 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 802.00 in Sunny Optical Technology on December 2, 2024 and sell it today you would earn a total of 252.00 from holding Sunny Optical Technology or generate 31.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ming Le Sports vs. Sunny Optical Technology
Performance |
Timeline |
Ming Le Sports |
Sunny Optical Technology |
Ming Le and Sunny Optical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ming Le and Sunny Optical
The main advantage of trading using opposite Ming Le and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.Ming Le vs. Boston Beer Co | Ming Le vs. United Breweries Co | Ming Le vs. SAN MIGUEL BREWERY | Ming Le vs. MOLSON RS BEVERAGE |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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