Correlation Between MYT Netherlands and Chow Tai

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

By analyzing existing cross correlation between MYT Netherlands Parent and Chow Tai Fook, you can compare the effects of market volatilities on MYT Netherlands and Chow Tai 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 MYT Netherlands with a short position of Chow Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYT Netherlands and Chow Tai.

Diversification Opportunities for MYT Netherlands and Chow Tai

0.41

Correlation Coefficient

MYT Netherlands  Chow Tai

Very weak diversification

The 3 months correlation between MYT and Chow is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MYT Netherlands Parent and Chow Tai Fook in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chow Tai Fook and MYT Netherlands 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 MYT Netherlands Parent are associated (or correlated) with Chow Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chow Tai Fook has no effect on the direction of MYT Netherlands i.e., MYT Netherlands and Chow Tai go up and down completely randomly.

Pair Corralation between MYT Netherlands and Chow Tai

Given the investment horizon of 90 days MYT Netherlands Parent is expected to generate 2.44 times more return on investment than Chow Tai. However, MYT Netherlands is 2.44 times more volatile than Chow Tai Fook. It trades about 0.14 of its potential returns per unit of risk. Chow Tai Fook is currently generating about 0.04 per unit of risk. If you would invest  375.00  in MYT Netherlands Parent on September 2, 2024 and sell it today you would earn a total of  295.00  from holding MYT Netherlands Parent or generate 78.67% return on investment over 90 days.

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

MYT Netherlands Parent  vs.  Chow Tai Fook

MYT Netherlands Parent

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MYT Netherlands Parent are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, MYT Netherlands exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chow Tai Fook

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with MYT Netherlands and Chow Tai

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

The idea behind MYT Netherlands Parent and Chow Tai Fook 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.