Correlation Between Luolai Home and Yunnan Chuangxin
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By analyzing existing cross correlation between Luolai Home Textile and Yunnan Chuangxin New, you can compare the effects of market volatilities on Luolai Home and Yunnan Chuangxin 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 Luolai Home with a short position of Yunnan Chuangxin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luolai Home and Yunnan Chuangxin.
Diversification Opportunities for Luolai Home and Yunnan Chuangxin
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Luolai and Yunnan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Luolai Home Textile and Yunnan Chuangxin New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Chuangxin New and Luolai Home 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 Luolai Home Textile are associated (or correlated) with Yunnan Chuangxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Chuangxin New has no effect on the direction of Luolai Home i.e., Luolai Home and Yunnan Chuangxin go up and down completely randomly.
Pair Corralation between Luolai Home and Yunnan Chuangxin
Assuming the 90 days trading horizon Luolai Home Textile is expected to generate 1.16 times more return on investment than Yunnan Chuangxin. However, Luolai Home is 1.16 times more volatile than Yunnan Chuangxin New. It trades about -0.04 of its potential returns per unit of risk. Yunnan Chuangxin New is currently generating about -0.41 per unit of risk. If you would invest 814.00 in Luolai Home Textile on September 26, 2024 and sell it today you would lose (19.00) from holding Luolai Home Textile or give up 2.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Luolai Home Textile vs. Yunnan Chuangxin New
Performance |
Timeline |
Luolai Home Textile |
Yunnan Chuangxin New |
Luolai Home and Yunnan Chuangxin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Luolai Home and Yunnan Chuangxin
The main advantage of trading using opposite Luolai Home and Yunnan Chuangxin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luolai Home position performs unexpectedly, Yunnan Chuangxin 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 Yunnan Chuangxin will offset losses from the drop in Yunnan Chuangxin's long position.Luolai Home vs. Cambricon Technologies Corp | Luolai Home vs. Loongson Technology Corp | Luolai Home vs. Shenzhen Fortune Trend | Luolai Home vs. Chongqing Road Bridge |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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