Correlation Between 159681 and Shandong Longda

Can any of the company-specific risk be diversified away by investing in both 159681 and Shandong Longda 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 159681 and Shandong Longda into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 159681 and Shandong Longda Meat, you can compare the effects of market volatilities on 159681 and Shandong Longda 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 159681 with a short position of Shandong Longda. Check out your portfolio center. Please also check ongoing floating volatility patterns of 159681 and Shandong Longda.

Diversification Opportunities for 159681 and Shandong Longda

0.53

Correlation Coefficient

159681  Shandong Longda

Very weak diversification

The 3 months correlation between 159681 and Shandong is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding 159681 and Shandong Longda Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Longda Meat and 159681 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 159681 are associated (or correlated) with Shandong Longda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Longda Meat has no effect on the direction of 159681 i.e., 159681 and Shandong Longda go up and down completely randomly.

Pair Corralation between 159681 and Shandong Longda

Assuming the 90 days trading horizon 159681 is expected to generate 3.51 times less return on investment than Shandong Longda. In addition to that, 159681 is 1.94 times more volatile than Shandong Longda Meat. It trades about 0.01 of its total potential returns per unit of risk. Shandong Longda Meat is currently generating about 0.05 per unit of volatility. If you would invest  750.00  in Shandong Longda Meat on September 30, 2024 and sell it today you would earn a total of  42.00  from holding Shandong Longda Meat or generate 5.6% return on investment over 90 days.

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

159681  vs.  Shandong Longda Meat

159681

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 159681 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 159681 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Shandong Longda Meat

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Longda Meat are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Longda may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with 159681 and Shandong Longda

The main advantage of trading using opposite 159681 and Shandong Longda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 159681 position performs unexpectedly, Shandong Longda 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 Shandong Longda will offset losses from the drop in Shandong Longda's long position.

The idea behind 159681 and Shandong Longda Meat 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.