Correlation Between BorgWarner and Mingteng International

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

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

Diversification Opportunities for BorgWarner and Mingteng International

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Correlation Coefficient

BorgWarner  Mingteng International

Pay attention - limited upside

The 3 months correlation between BorgWarner and Mingteng is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BorgWarner and Mingteng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingteng International and BorgWarner 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 BorgWarner 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 BorgWarner i.e., BorgWarner and Mingteng International go up and down completely randomly.

Pair Corralation between BorgWarner and Mingteng International

Considering the 90-day investment horizon BorgWarner is expected to generate 6.42 times less return on investment than Mingteng International. But when comparing it to its historical volatility, BorgWarner is 4.47 times less risky than Mingteng International. It trades about 0.05 of its potential returns per unit of risk. Mingteng International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  589.00  in Mingteng International on October 24, 2024 and sell it today you would earn a total of  25.00  from holding Mingteng International or generate 4.24% return on investment over 90 days.

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

BorgWarner  vs.  Mingteng International

BorgWarner

Risk-Adjusted Performance

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Very Weak

Over the last 90 days BorgWarner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BorgWarner is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mingteng International

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Mingteng International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Mingteng International is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BorgWarner and Mingteng International

The main advantage of trading using opposite BorgWarner and Mingteng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BorgWarner 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 BorgWarner 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.