Correlation Between Luyin Investment and Zhejiang HISUN

Can any of the company-specific risk be diversified away by investing in both Luyin Investment and Zhejiang HISUN 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 Zhejiang HISUN 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 Zhejiang HISUN Biomaterials, you can compare the effects of market volatilities on Luyin Investment and Zhejiang HISUN 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 Zhejiang HISUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luyin Investment and Zhejiang HISUN.

Diversification Opportunities for Luyin Investment and Zhejiang HISUN

0.95

Correlation Coefficient

Luyin Investment  Zhejiang HISUN

Almost no diversification

The 3 months correlation between Luyin and Zhejiang is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Luyin Investment Group and Zhejiang HISUN Biomaterials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang HISUN Bioma 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 Zhejiang HISUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang HISUN Bioma has no effect on the direction of Luyin Investment i.e., Luyin Investment and Zhejiang HISUN go up and down completely randomly.

Pair Corralation between Luyin Investment and Zhejiang HISUN

Assuming the 90 days trading horizon Luyin Investment Group is expected to generate 0.78 times more return on investment than Zhejiang HISUN. However, Luyin Investment Group is 1.28 times less risky than Zhejiang HISUN. It trades about 0.0 of its potential returns per unit of risk. Zhejiang HISUN Biomaterials is currently generating about -0.01 per unit of risk. If you would invest  701.00  in Luyin Investment Group on September 13, 2024 and sell it today you would lose (61.00) from holding Luyin Investment Group or give up 8.7% of portfolio value over 90 days.

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

Luyin Investment Group  vs.  Zhejiang HISUN Biomaterials

Luyin Investment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Luyin Investment Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Luyin Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Zhejiang HISUN Bioma

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang HISUN Biomaterials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhejiang HISUN sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Luyin Investment and Zhejiang HISUN

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

The idea behind Luyin Investment Group and Zhejiang HISUN Biomaterials 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.