Correlation Between Lear and Mingteng International
Can any of the company-specific risk be diversified away by investing in both Lear and Mingteng International 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 Lear and Mingteng International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lear Corporation and Mingteng International, you can compare the effects of market volatilities on Lear and Mingteng International 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 Lear with a short position of Mingteng International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lear and Mingteng International.
Diversification Opportunities for Lear and Mingteng International
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lear and Mingteng is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lear Corp. and Mingteng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingteng International and Lear 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 Lear Corporation are associated (or correlated) with Mingteng International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mingteng International has no effect on the direction of Lear i.e., Lear and Mingteng International go up and down completely randomly.
Pair Corralation between Lear and Mingteng International
Considering the 90-day investment horizon Lear Corporation is expected to generate 0.12 times more return on investment than Mingteng International. However, Lear Corporation is 8.57 times less risky than Mingteng International. It trades about 0.07 of its potential returns per unit of risk. Mingteng International is currently generating about -0.07 per unit of risk. If you would invest 9,576 in Lear Corporation on September 1, 2024 and sell it today you would earn a total of 208.00 from holding Lear Corporation or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lear Corp. vs. Mingteng International
Performance |
| Timeline |
| Lear |
| Mingteng International |
Lear and Mingteng International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lear and Mingteng International
The main advantage of trading using opposite Lear and Mingteng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lear position performs unexpectedly, Mingteng International 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 Mingteng International will offset losses from the drop in Mingteng International's long position.The idea behind Lear Corporation and Mingteng International 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.| Mingteng International vs. Ford Motor | Mingteng International vs. General Motors | Mingteng International vs. Goodyear Tire Rubber | Mingteng International vs. Li Auto |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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