Correlation Between Lander Sports and Hainan Haiqi

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

By analyzing existing cross correlation between Lander Sports Development and Hainan Haiqi Transportation, you can compare the effects of market volatilities on Lander Sports and Hainan Haiqi 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 Lander Sports with a short position of Hainan Haiqi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lander Sports and Hainan Haiqi.

Diversification Opportunities for Lander Sports and Hainan Haiqi

0.33

Correlation Coefficient

Lander Sports  Hainan Haiqi

Weak diversification

The 3 months correlation between Lander and Hainan is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lander Sports Development and Hainan Haiqi Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Haiqi Transpo and Lander Sports 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 Lander Sports Development are associated (or correlated) with Hainan Haiqi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Haiqi Transpo has no effect on the direction of Lander Sports i.e., Lander Sports and Hainan Haiqi go up and down completely randomly.

Pair Corralation between Lander Sports and Hainan Haiqi

Assuming the 90 days trading horizon Lander Sports Development is expected to generate 1.84 times more return on investment than Hainan Haiqi. However, Lander Sports is 1.84 times more volatile than Hainan Haiqi Transportation. It trades about 0.04 of its potential returns per unit of risk. Hainan Haiqi Transportation is currently generating about -0.12 per unit of risk. If you would invest  317.00  in Lander Sports Development on December 2, 2024 and sell it today you would earn a total of  19.00  from holding Lander Sports Development or generate 5.99% return on investment over 90 days.

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

Lander Sports Development  vs.  Hainan Haiqi Transportation

Lander Sports Development

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lander Sports Development are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lander Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

Hainan Haiqi Transpo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hainan Haiqi Transportation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lander Sports and Hainan Haiqi

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

The idea behind Lander Sports Development and Hainan Haiqi Transportation 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.