Correlation Between Marten Transport and Mingzhu Logistics

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

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

Diversification Opportunities for Marten Transport and Mingzhu Logistics

-0.03

Correlation Coefficient

Marten Transport  Mingzhu Logistics

Good diversification

The 3 months correlation between Marten and Mingzhu is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Marten Transport and Mingzhu Logistics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingzhu Logistics and Marten Transport 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 Marten Transport are associated (or correlated) with Mingzhu Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mingzhu Logistics has no effect on the direction of Marten Transport i.e., Marten Transport and Mingzhu Logistics go up and down completely randomly.

Pair Corralation between Marten Transport and Mingzhu Logistics

Given the investment horizon of 90 days Marten Transport is expected to generate 0.22 times more return on investment than Mingzhu Logistics. However, Marten Transport is 4.47 times less risky than Mingzhu Logistics. It trades about -0.09 of its potential returns per unit of risk. Mingzhu Logistics Holdings is currently generating about -0.02 per unit of risk. If you would invest  1,543  in Marten Transport on December 28, 2024 and sell it today you would lose (145.00) from holding Marten Transport or give up 9.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Marten Transport  vs.  Mingzhu Logistics Holdings

Marten Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marten Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Mingzhu Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mingzhu Logistics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Marten Transport and Mingzhu Logistics

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

The idea behind Marten Transport and Mingzhu Logistics 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.