Correlation Between Time Publishing and Lutian Machinery

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

By analyzing existing cross correlation between Time Publishing and and Lutian Machinery Co, you can compare the effects of market volatilities on Time Publishing and Lutian Machinery 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 Time Publishing with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Time Publishing and Lutian Machinery.

Diversification Opportunities for Time Publishing and Lutian Machinery

0.41

Correlation Coefficient

Time Publishing  Lutian Machinery

Very weak diversification

The 3 months correlation between Time and Lutian is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Time Publishing and and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Time Publishing 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 Time Publishing and are associated (or correlated) with Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of Time Publishing i.e., Time Publishing and Lutian Machinery go up and down completely randomly.

Pair Corralation between Time Publishing and Lutian Machinery

Assuming the 90 days trading horizon Time Publishing and is expected to under-perform the Lutian Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Time Publishing and is 1.14 times less risky than Lutian Machinery. The stock trades about -0.04 of its potential returns per unit of risk. The Lutian Machinery Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,383  in Lutian Machinery Co on October 24, 2024 and sell it today you would earn a total of  170.00  from holding Lutian Machinery Co or generate 12.29% return on investment over 90 days.

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

Time Publishing and  vs.  Lutian Machinery Co

Time Publishing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lutian Machinery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lutian Machinery Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lutian Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Time Publishing and Lutian Machinery

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

The idea behind Time Publishing and and Lutian Machinery 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.