Correlation Between Lootom Telcovideo and Beijing HuaYuanYiTong

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

By analyzing existing cross correlation between Lootom Telcovideo Network and Beijing HuaYuanYiTong Thermal, you can compare the effects of market volatilities on Lootom Telcovideo and Beijing HuaYuanYiTong 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 Lootom Telcovideo with a short position of Beijing HuaYuanYiTong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lootom Telcovideo and Beijing HuaYuanYiTong.

Diversification Opportunities for Lootom Telcovideo and Beijing HuaYuanYiTong

0.8

Correlation Coefficient

Lootom Telcovideo  Beijing HuaYuanYiTong

Very poor diversification

The 3 months correlation between Lootom and Beijing is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lootom Telcovideo Network and Beijing HuaYuanYiTong Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing HuaYuanYiTong and Lootom Telcovideo 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 Lootom Telcovideo Network are associated (or correlated) with Beijing HuaYuanYiTong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing HuaYuanYiTong has no effect on the direction of Lootom Telcovideo i.e., Lootom Telcovideo and Beijing HuaYuanYiTong go up and down completely randomly.

Pair Corralation between Lootom Telcovideo and Beijing HuaYuanYiTong

Assuming the 90 days trading horizon Lootom Telcovideo Network is expected to generate 1.39 times more return on investment than Beijing HuaYuanYiTong. However, Lootom Telcovideo is 1.39 times more volatile than Beijing HuaYuanYiTong Thermal. It trades about 0.25 of its potential returns per unit of risk. Beijing HuaYuanYiTong Thermal is currently generating about -0.08 per unit of risk. If you would invest  718.00  in Lootom Telcovideo Network on September 19, 2024 and sell it today you would earn a total of  166.00  from holding Lootom Telcovideo Network or generate 23.12% return on investment over 90 days.

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

Lootom Telcovideo Network  vs.  Beijing HuaYuanYiTong Thermal

Lootom Telcovideo Network

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lootom Telcovideo Network are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lootom Telcovideo sustained solid returns over the last few months and may actually be approaching a breakup point.

Beijing HuaYuanYiTong

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing HuaYuanYiTong Thermal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing HuaYuanYiTong sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lootom Telcovideo and Beijing HuaYuanYiTong

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

The idea behind Lootom Telcovideo Network and Beijing HuaYuanYiTong Thermal 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.