Correlation Between Dorman Products and Mingteng International

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

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

Diversification Opportunities for Dorman Products and Mingteng International

0.77

Correlation Coefficient

Dorman Products  Mingteng International

Poor diversification

The 3 months correlation between Dorman and Mingteng is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dorman Products and Mingteng International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mingteng International and Dorman Products 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 Dorman Products 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 Dorman Products i.e., Dorman Products and Mingteng International go up and down completely randomly.

Pair Corralation between Dorman Products and Mingteng International

Given the investment horizon of 90 days Dorman Products is expected to generate 0.85 times more return on investment than Mingteng International. However, Dorman Products is 1.18 times less risky than Mingteng International. It trades about 0.12 of its potential returns per unit of risk. Mingteng International is currently generating about 0.0 per unit of risk. If you would invest  10,973  in Dorman Products on July 13, 2024 and sell it today you would earn a total of  419.00  from holding Dorman Products or generate 3.82% return on investment over 90 days.

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

Dorman Products  vs.  Mingteng International

Dorman Products

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dorman Products are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dorman Products displayed solid returns over the last few months and may actually be approaching a breakup point.

Mingteng International

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mingteng International are ranked lower than 18 (%) 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 Dorman Products and Mingteng International

The main advantage of trading using opposite Dorman Products and Mingteng International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorman Products 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 Dorman Products 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 Stocks Directory module to find actively traded stocks across global markets.