Correlation Between Varta AG and Ming Le

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

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

Diversification Opportunities for Varta AG and Ming Le

-0.36

Correlation Coefficient

Varta AG  Ming Le

Very good diversification

The 3 months correlation between Varta and Ming is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Varta AG and Ming Le Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Le Sports and Varta AG 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 Varta AG are associated (or correlated) with Ming Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Le Sports has no effect on the direction of Varta AG i.e., Varta AG and Ming Le go up and down completely randomly.

Pair Corralation between Varta AG and Ming Le

Assuming the 90 days trading horizon Varta AG is expected to under-perform the Ming Le. In addition to that, Varta AG is 1.58 times more volatile than Ming Le Sports. It trades about -0.32 of its total potential returns per unit of risk. Ming Le Sports is currently generating about -0.34 per unit of volatility. If you would invest  140.00  in Ming Le Sports on October 1, 2024 and sell it today you would lose (20.00) from holding Ming Le Sports or give up 14.29% of portfolio value over 90 days.

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

Varta AG  vs.  Ming Le Sports

Varta AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Varta AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Varta AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ming Le Sports

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ming Le Sports are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ming Le reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Varta AG and Ming Le

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

The idea behind Varta AG and Ming Le Sports 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.