Correlation Between Goodyear Tire and Mingteng International

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

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

Diversification Opportunities for Goodyear Tire and Mingteng International

0.31

Correlation Coefficient

Goodyear Tire  Mingteng International

Weak diversification

The 3 months correlation between Goodyear and Mingteng is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Mingteng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingteng International and Goodyear Tire 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 Goodyear Tire Rubber 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 Goodyear Tire i.e., Goodyear Tire and Mingteng International go up and down completely randomly.

Pair Corralation between Goodyear Tire and Mingteng International

Allowing for the 90-day total investment horizon Goodyear Tire is expected to generate 1.68 times less return on investment than Mingteng International. But when comparing it to its historical volatility, Goodyear Tire Rubber is 3.15 times less risky than Mingteng International. It trades about 0.17 of its potential returns per unit of risk. Mingteng International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  422.00  in Mingteng International on September 4, 2024 and sell it today you would earn a total of  144.00  from holding Mingteng International or generate 34.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Goodyear Tire Rubber  vs.  Mingteng International

Goodyear Tire Rubber

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goodyear Tire Rubber are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Goodyear Tire unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mingteng International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mingteng International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting 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 Goodyear Tire and Mingteng International

The main advantage of trading using opposite Goodyear Tire and Mingteng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire 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 Goodyear Tire Rubber 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.