Correlation Between Lootom Telcovideo and China Publishing

Can any of the company-specific risk be diversified away by investing in both Lootom Telcovideo and China Publishing 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 China Publishing 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 China Publishing Media, you can compare the effects of market volatilities on Lootom Telcovideo and China Publishing 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 China Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lootom Telcovideo and China Publishing.

Diversification Opportunities for Lootom Telcovideo and China Publishing

-0.31

Correlation Coefficient

Lootom Telcovideo  China Publishing

Very good diversification

The 3 months correlation between Lootom and China is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lootom Telcovideo Network and China Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Publishing Media 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 China Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Publishing Media has no effect on the direction of Lootom Telcovideo i.e., Lootom Telcovideo and China Publishing go up and down completely randomly.

Pair Corralation between Lootom Telcovideo and China Publishing

Assuming the 90 days trading horizon Lootom Telcovideo Network is expected to generate 1.25 times more return on investment than China Publishing. However, Lootom Telcovideo is 1.25 times more volatile than China Publishing Media. It trades about 0.14 of its potential returns per unit of risk. China Publishing Media is currently generating about -0.04 per unit of risk. If you would invest  848.00  in Lootom Telcovideo Network on December 30, 2024 and sell it today you would earn a total of  172.00  from holding Lootom Telcovideo Network or generate 20.28% return on investment over 90 days.

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

Lootom Telcovideo Network  vs.  China Publishing Media

Lootom Telcovideo Network

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lootom Telcovideo Network are ranked lower than 11 (%) 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.

China Publishing Media

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lootom Telcovideo and China Publishing

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

The idea behind Lootom Telcovideo Network and China Publishing Media 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.