Correlation Between Luyin Investment and Offshore Oil

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

By analyzing existing cross correlation between Luyin Investment Group and Offshore Oil Engineering, you can compare the effects of market volatilities on Luyin Investment and Offshore Oil 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 Luyin Investment with a short position of Offshore Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luyin Investment and Offshore Oil.

Diversification Opportunities for Luyin Investment and Offshore Oil

0.25

Correlation Coefficient

Luyin Investment  Offshore Oil

Modest diversification

The 3 months correlation between Luyin and Offshore is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Luyin Investment Group and Offshore Oil Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Offshore Oil Engineering and Luyin Investment 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 Luyin Investment Group are associated (or correlated) with Offshore Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Offshore Oil Engineering has no effect on the direction of Luyin Investment i.e., Luyin Investment and Offshore Oil go up and down completely randomly.

Pair Corralation between Luyin Investment and Offshore Oil

Assuming the 90 days trading horizon Luyin Investment Group is expected to generate 1.3 times more return on investment than Offshore Oil. However, Luyin Investment is 1.3 times more volatile than Offshore Oil Engineering. It trades about 0.04 of its potential returns per unit of risk. Offshore Oil Engineering is currently generating about 0.05 per unit of risk. If you would invest  598.00  in Luyin Investment Group on December 30, 2024 and sell it today you would earn a total of  26.00  from holding Luyin Investment Group or generate 4.35% return on investment over 90 days.

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

Luyin Investment Group  vs.  Offshore Oil Engineering

Luyin Investment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Luyin Investment Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Luyin Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Offshore Oil Engineering

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Offshore Oil Engineering are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Offshore Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Luyin Investment and Offshore Oil

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

The idea behind Luyin Investment Group and Offshore Oil Engineering 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.