Correlation Between Pekin Life and Mingteng International

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

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

Diversification Opportunities for Pekin Life and Mingteng International

-0.18

Correlation Coefficient

Pekin Life  Mingteng International

Good diversification

The 3 months correlation between Pekin and Mingteng is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and Mingteng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingteng International and Pekin Life 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 Pekin Life Insurance 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 Pekin Life i.e., Pekin Life and Mingteng International go up and down completely randomly.

Pair Corralation between Pekin Life and Mingteng International

Given the investment horizon of 90 days Pekin Life is expected to generate 269.8 times less return on investment than Mingteng International. But when comparing it to its historical volatility, Pekin Life Insurance is 23.87 times less risky than Mingteng International. It trades about 0.0 of its potential returns per unit of risk. Mingteng International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Mingteng International on December 29, 2024 and sell it today you would lose (56.00) from holding Mingteng International or give up 8.96% of portfolio value over 90 days.

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

Pekin Life Insurance  vs.  Mingteng International

Pekin Life Insurance

Risk-Adjusted Performance

Very Weak

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

Mingteng International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mingteng International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Mingteng International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pekin Life and Mingteng International

The main advantage of trading using opposite Pekin Life and Mingteng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin Life 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 Pekin Life Insurance 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.