Correlation Between Telling Telecommunicatio and Luzhou Lao

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

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

Diversification Opportunities for Telling Telecommunicatio and Luzhou Lao

0.71

Correlation Coefficient

Telling Telecommunicatio  Luzhou Lao

Poor diversification

The 3 months correlation between Telling and Luzhou is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Telling Telecommunication Hold and Luzhou Lao Jiao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luzhou Lao Jiao and Telling Telecommunicatio 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 Telling Telecommunication Holding are associated (or correlated) with Luzhou Lao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luzhou Lao Jiao has no effect on the direction of Telling Telecommunicatio i.e., Telling Telecommunicatio and Luzhou Lao go up and down completely randomly.

Pair Corralation between Telling Telecommunicatio and Luzhou Lao

Assuming the 90 days trading horizon Telling Telecommunication Holding is expected to under-perform the Luzhou Lao. In addition to that, Telling Telecommunicatio is 1.79 times more volatile than Luzhou Lao Jiao. It trades about -0.03 of its total potential returns per unit of risk. Luzhou Lao Jiao is currently generating about 0.04 per unit of volatility. If you would invest  12,804  in Luzhou Lao Jiao on December 25, 2024 and sell it today you would earn a total of  471.00  from holding Luzhou Lao Jiao or generate 3.68% return on investment over 90 days.

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

Telling Telecommunication Hold  vs.  Luzhou Lao Jiao

Telling Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telling Telecommunication Holding 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.

Luzhou Lao Jiao

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Luzhou Lao Jiao are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Luzhou Lao is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Telling Telecommunicatio and Luzhou Lao

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

The idea behind Telling Telecommunication Holding and Luzhou Lao Jiao 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.