Correlation Between Lonkey Industrial and Ye Chiu

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Can any of the company-specific risk be diversified away by investing in both Lonkey Industrial and Ye Chiu 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 Lonkey Industrial and Ye Chiu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonkey Industrial Co and Ye Chiu Metal, you can compare the effects of market volatilities on Lonkey Industrial and Ye Chiu 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 Lonkey Industrial with a short position of Ye Chiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonkey Industrial and Ye Chiu.

Diversification Opportunities for Lonkey Industrial and Ye Chiu

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Lonkey and 601388 is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lonkey Industrial Co and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal and Lonkey Industrial 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 Lonkey Industrial Co are associated (or correlated) with Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of Lonkey Industrial i.e., Lonkey Industrial and Ye Chiu go up and down completely randomly.

Pair Corralation between Lonkey Industrial and Ye Chiu

Assuming the 90 days trading horizon Lonkey Industrial Co is expected to generate 1.03 times more return on investment than Ye Chiu. However, Lonkey Industrial is 1.03 times more volatile than Ye Chiu Metal. It trades about 0.02 of its potential returns per unit of risk. Ye Chiu Metal is currently generating about -0.02 per unit of risk. If you would invest  284.00  in Lonkey Industrial Co on October 10, 2024 and sell it today you would earn a total of  4.00  from holding Lonkey Industrial Co or generate 1.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Lonkey Industrial Co  vs.  Ye Chiu Metal

 Performance 
       Timeline  
Lonkey Industrial 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Lonkey Industrial Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lonkey Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Ye Chiu Metal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ye Chiu Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ye Chiu is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lonkey Industrial and Ye Chiu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lonkey Industrial and Ye Chiu

The main advantage of trading using opposite Lonkey Industrial and Ye Chiu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonkey Industrial position performs unexpectedly, Ye Chiu 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 Ye Chiu will offset losses from the drop in Ye Chiu's long position.
The idea behind Lonkey Industrial Co and Ye Chiu Metal 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.
Check out your portfolio center.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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