Correlation Between Tredegar and Mingteng International

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

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

Diversification Opportunities for Tredegar and Mingteng International

0.36

Correlation Coefficient

Tredegar  Mingteng International

Weak diversification

The 3 months correlation between Tredegar and Mingteng is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Tredegar and Mingteng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingteng International and Tredegar 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 Tredegar 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 Tredegar i.e., Tredegar and Mingteng International go up and down completely randomly.

Pair Corralation between Tredegar and Mingteng International

Allowing for the 90-day total investment horizon Tredegar is expected to generate 3.05 times less return on investment than Mingteng International. But when comparing it to its historical volatility, Tredegar is 2.29 times less risky than Mingteng International. It trades about 0.06 of its potential returns per unit of risk. 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 September 12, 2024 and sell it today you would earn a total of  240.00  from holding Mingteng International or generate 68.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	49.85%
Values	Daily Returns

Tredegar  vs.  Mingteng International

Tredegar

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tredegar are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Tredegar reported solid returns over the last few months and may actually be approaching a breakup point.

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 weak 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 Tredegar and Mingteng International

The main advantage of trading using opposite Tredegar and Mingteng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tredegar 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 Tredegar 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.