Correlation Between GMS and Mingteng International

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

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

Diversification Opportunities for GMS and Mingteng International

-0.1

Correlation Coefficient

GMS  Mingteng International

Good diversification

The 3 months correlation between GMS and Mingteng is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Mingteng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingteng International and GMS 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 GMS Inc 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 GMS i.e., GMS and Mingteng International go up and down completely randomly.

Pair Corralation between GMS and Mingteng International

Considering the 90-day investment horizon GMS Inc is expected to under-perform the Mingteng International. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 4.1 times less risky than Mingteng International. The stock trades about -0.69 of its potential returns per unit of risk. The Mingteng International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  575.00  in Mingteng International on October 11, 2024 and sell it today you would lose (3.00) from holding Mingteng International or give up 0.52% of portfolio value over 90 days.

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

GMS Inc  vs.  Mingteng International

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Mingteng International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mingteng International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Mingteng International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GMS and Mingteng International

The main advantage of trading using opposite GMS and Mingteng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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 GMS Inc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.