Correlation Between Lier Chemical and Guizhou Chanhen
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By analyzing existing cross correlation between Lier Chemical Co and Guizhou Chanhen Chemical, you can compare the effects of market volatilities on Lier Chemical and Guizhou Chanhen 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 Lier Chemical with a short position of Guizhou Chanhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lier Chemical and Guizhou Chanhen.
Diversification Opportunities for Lier Chemical and Guizhou Chanhen
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lier and Guizhou is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lier Chemical Co and Guizhou Chanhen Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guizhou Chanhen Chemical and Lier Chemical 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 Lier Chemical Co are associated (or correlated) with Guizhou Chanhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guizhou Chanhen Chemical has no effect on the direction of Lier Chemical i.e., Lier Chemical and Guizhou Chanhen go up and down completely randomly.
Pair Corralation between Lier Chemical and Guizhou Chanhen
Assuming the 90 days trading horizon Lier Chemical Co is expected to under-perform the Guizhou Chanhen. But the stock apears to be less risky and, when comparing its historical volatility, Lier Chemical Co is 1.27 times less risky than Guizhou Chanhen. The stock trades about -0.03 of its potential returns per unit of risk. The Guizhou Chanhen Chemical is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,100 in Guizhou Chanhen Chemical on September 28, 2024 and sell it today you would earn a total of 390.00 from holding Guizhou Chanhen Chemical or generate 18.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Lier Chemical Co vs. Guizhou Chanhen Chemical
Performance |
Timeline |
Lier Chemical |
Guizhou Chanhen Chemical |
Lier Chemical and Guizhou Chanhen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lier Chemical and Guizhou Chanhen
The main advantage of trading using opposite Lier Chemical and Guizhou Chanhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lier Chemical position performs unexpectedly, Guizhou Chanhen 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 Guizhou Chanhen will offset losses from the drop in Guizhou Chanhen's long position.Lier Chemical vs. Will Semiconductor Co | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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