Correlation Between LKQ and Mingteng International
Can any of the company-specific risk be diversified away by investing in both LKQ 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 LKQ and Mingteng International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LKQ Corporation and Mingteng International, you can compare the effects of market volatilities on LKQ 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 LKQ with a short position of Mingteng International. Check out your portfolio center. Please also check ongoing floating volatility patterns of LKQ and Mingteng International.
Diversification Opportunities for LKQ and Mingteng International
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LKQ and Mingteng is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding LKQ Corp. and Mingteng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingteng International and LKQ 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 LKQ 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 LKQ i.e., LKQ and Mingteng International go up and down completely randomly.
Pair Corralation between LKQ and Mingteng International
Considering the 90-day investment horizon LKQ Corporation is expected to under-perform the Mingteng International. But the stock apears to be less risky and, when comparing its historical volatility, LKQ Corporation is 5.13 times less risky than Mingteng International. The stock trades about -0.03 of its potential returns per unit of risk. The Mingteng International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 350.00 in Mingteng International on August 27, 2024 and sell it today you would earn a total of 246.00 from holding Mingteng International or generate 70.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.05% |
| Values | Daily Returns |
LKQ Corp. vs. Mingteng International
Performance |
| Timeline |
| LKQ Corporation |
| Mingteng International |
LKQ and Mingteng International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LKQ and Mingteng International
The main advantage of trading using opposite LKQ and Mingteng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LKQ 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 LKQ 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |