Correlation Between Lingsen Precision and Avision

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

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

Diversification Opportunities for Lingsen Precision and Avision

0.49

Correlation Coefficient

Lingsen Precision  Avision

Very weak diversification

The 3 months correlation between Lingsen and Avision is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lingsen Precision Industries and Avision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avision and Lingsen Precision 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 Lingsen Precision Industries are associated (or correlated) with Avision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avision has no effect on the direction of Lingsen Precision i.e., Lingsen Precision and Avision go up and down completely randomly.

Pair Corralation between Lingsen Precision and Avision

Assuming the 90 days trading horizon Lingsen Precision Industries is expected to generate 0.92 times more return on investment than Avision. However, Lingsen Precision Industries is 1.08 times less risky than Avision. It trades about -0.03 of its potential returns per unit of risk. Avision is currently generating about -0.18 per unit of risk. If you would invest  1,900  in Lingsen Precision Industries on September 14, 2024 and sell it today you would lose (120.00) from holding Lingsen Precision Industries or give up 6.32% of portfolio value over 90 days.

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

Lingsen Precision Industries  vs.  Avision

Lingsen Precision

Risk-Adjusted Performance

0 of 100

Very Weak

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

Avision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lingsen Precision and Avision

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

The idea behind Lingsen Precision Industries and Avision 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.