Correlation Between DHT Holdings and Lear

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

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

Diversification Opportunities for DHT Holdings and Lear

0.32

Correlation Coefficient

DHT Holdings  Lear

Weak diversification

The 3 months correlation between DHT and Lear is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear and DHT Holdings 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 DHT Holdings are associated (or correlated) with Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of DHT Holdings i.e., DHT Holdings and Lear go up and down completely randomly.

Pair Corralation between DHT Holdings and Lear

Considering the 90-day investment horizon DHT Holdings is expected to generate 4.18 times less return on investment than Lear. But when comparing it to its historical volatility, DHT Holdings is 1.19 times less risky than Lear. It trades about 0.06 of its potential returns per unit of risk. Lear Corporation is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8,464  in Lear Corporation on April 24, 2025 and sell it today you would earn a total of  2,087  from holding Lear Corporation or generate 24.66% return on investment over 90 days.

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

DHT Holdings  vs.  Lear Corp.

DHT Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DHT Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, DHT Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Lear

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lear Corporation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Lear sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DHT Holdings and Lear

The main advantage of trading using opposite DHT Holdings and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHT Holdings position performs unexpectedly, Lear 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 Lear will offset losses from the drop in Lear's long position.

The idea behind DHT Holdings and Lear Corporation 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.