Correlation Between Luzhou Lao and Contemporary Amperex

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

By analyzing existing cross correlation between Luzhou Lao Jiao and Contemporary Amperex Technology, you can compare the effects of market volatilities on Luzhou Lao and Contemporary Amperex 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 Luzhou Lao with a short position of Contemporary Amperex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luzhou Lao and Contemporary Amperex.

Diversification Opportunities for Luzhou Lao and Contemporary Amperex

0.41

Correlation Coefficient

Luzhou Lao  Contemporary Amperex

Very weak diversification

The 3 months correlation between Luzhou and Contemporary is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Luzhou Lao Jiao and Contemporary Amperex Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contemporary Amperex and Luzhou Lao 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 Luzhou Lao Jiao are associated (or correlated) with Contemporary Amperex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contemporary Amperex has no effect on the direction of Luzhou Lao i.e., Luzhou Lao and Contemporary Amperex go up and down completely randomly.

Pair Corralation between Luzhou Lao and Contemporary Amperex

Assuming the 90 days trading horizon Luzhou Lao Jiao is expected to under-perform the Contemporary Amperex. But the stock apears to be less risky and, when comparing its historical volatility, Luzhou Lao Jiao is 1.03 times less risky than Contemporary Amperex. The stock trades about -0.07 of its potential returns per unit of risk. The Contemporary Amperex Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  26,094  in Contemporary Amperex Technology on December 2, 2024 and sell it today you would earn a total of  336.00  from holding Contemporary Amperex Technology or generate 1.29% return on investment over 90 days.

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

Luzhou Lao Jiao  vs.  Contemporary Amperex Technolog

Luzhou Lao Jiao

Risk-Adjusted Performance

Very Weak

Over the last 90 days Luzhou Lao Jiao has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Contemporary Amperex

Risk-Adjusted Performance

Weak

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

Pair Trading with Luzhou Lao and Contemporary Amperex

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

The idea behind Luzhou Lao Jiao and Contemporary Amperex Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.