Correlation Between Carnival Industrial and Li Peng

Can any of the company-specific risk be diversified away by investing in both Carnival Industrial and Li Peng 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 Carnival Industrial and Li Peng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carnival Industrial Corp and Li Peng Enterprise, you can compare the effects of market volatilities on Carnival Industrial and Li Peng 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 Carnival Industrial with a short position of Li Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Industrial and Li Peng.

Diversification Opportunities for Carnival Industrial and Li Peng

0.33

Correlation Coefficient

Carnival Industrial  Li Peng

Weak diversification

The 3 months correlation between Carnival and 1447 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Industrial Corp and Li Peng Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Peng Enterprise and Carnival Industrial 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 Carnival Industrial Corp are associated (or correlated) with Li Peng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Peng Enterprise has no effect on the direction of Carnival Industrial i.e., Carnival Industrial and Li Peng go up and down completely randomly.

Pair Corralation between Carnival Industrial and Li Peng

Assuming the 90 days trading horizon Carnival Industrial Corp is expected to under-perform the Li Peng. In addition to that, Carnival Industrial is 1.35 times more volatile than Li Peng Enterprise. It trades about -0.08 of its total potential returns per unit of risk. Li Peng Enterprise is currently generating about 0.0 per unit of volatility. If you would invest  713.00  in Li Peng Enterprise on December 30, 2024 and sell it today you would lose (3.00) from holding Li Peng Enterprise or give up 0.42% of portfolio value over 90 days.

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

Carnival Industrial Corp  vs.  Li Peng Enterprise

Carnival Industrial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Li Peng Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Li Peng Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Li Peng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Carnival Industrial and Li Peng

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

The idea behind Carnival Industrial Corp and Li Peng Enterprise 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.