Correlation Between Lihtai Construction and Max Zipper

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

By analyzing existing cross correlation between Lihtai Construction Enterprise and Max Zipper Co, you can compare the effects of market volatilities on Lihtai Construction and Max Zipper 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 Lihtai Construction with a short position of Max Zipper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lihtai Construction and Max Zipper.

Diversification Opportunities for Lihtai Construction and Max Zipper

-0.1

Correlation Coefficient

Lihtai Construction  Max Zipper

Good diversification

The 3 months correlation between Lihtai and Max is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lihtai Construction Enterprise and Max Zipper Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Zipper and Lihtai Construction 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 Lihtai Construction Enterprise are associated (or correlated) with Max Zipper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Zipper has no effect on the direction of Lihtai Construction i.e., Lihtai Construction and Max Zipper go up and down completely randomly.

Pair Corralation between Lihtai Construction and Max Zipper

Assuming the 90 days trading horizon Lihtai Construction is expected to generate 3.96 times less return on investment than Max Zipper. But when comparing it to its historical volatility, Lihtai Construction Enterprise is 2.27 times less risky than Max Zipper. It trades about 0.04 of its potential returns per unit of risk. Max Zipper Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,360  in Max Zipper Co on October 8, 2024 and sell it today you would earn a total of  90.00  from holding Max Zipper Co or generate 0.96% return on investment over 90 days.

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

Lihtai Construction Enterprise  vs.  Max Zipper Co

Lihtai Construction

Risk-Adjusted Performance

0 of 100

Very Weak

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

Max Zipper

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Max Zipper Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Max Zipper may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lihtai Construction and Max Zipper

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

The idea behind Lihtai Construction Enterprise and Max Zipper Co 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.