Correlation Between Table Trac and MGM China

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

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

Diversification Opportunities for Table Trac and MGM China

0.03

Correlation Coefficient

Table Trac  MGM China

Significant diversification

The 3 months correlation between Table and MGM is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Table Trac 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 Table Trac 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 Table Trac 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 Table Trac i.e., Table Trac and MGM China go up and down completely randomly.

Pair Corralation between Table Trac and MGM China

Given the investment horizon of 90 days Table Trac is expected to generate 2.65 times less return on investment than MGM China. But when comparing it to its historical volatility, Table Trac is 1.53 times less risky than MGM China. It trades about 0.02 of its potential returns per unit of risk. MGM China Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  103.00  in MGM China Holdings on September 14, 2024 and sell it today you would earn a total of  2.00  from holding MGM China Holdings or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.16%
Values	Daily Returns

Table Trac  vs.  MGM China Holdings

Table Trac

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Table Trac are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Table Trac may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Table Trac and MGM China

The main advantage of trading using opposite Table Trac and MGM China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Table Trac 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 Table Trac 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.