Correlation Between Hefei Metalforming and Lander Sports

Can any of the company-specific risk be diversified away by investing in both Hefei Metalforming and Lander Sports 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 Hefei Metalforming and Lander Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hefei Metalforming Mach and Lander Sports Development, you can compare the effects of market volatilities on Hefei Metalforming and Lander Sports 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 Hefei Metalforming with a short position of Lander Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Lander Sports.

Diversification Opportunities for Hefei Metalforming and Lander Sports

0.4

Correlation Coefficient

Hefei Metalforming  Lander Sports

Very weak diversification

The 3 months correlation between Hefei and Lander is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Lander Sports Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lander Sports Development and Hefei Metalforming 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 Hefei Metalforming Mach are associated (or correlated) with Lander Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lander Sports Development has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Lander Sports go up and down completely randomly.

Pair Corralation between Hefei Metalforming and Lander Sports

Assuming the 90 days trading horizon Hefei Metalforming is expected to generate 1.68 times less return on investment than Lander Sports. In addition to that, Hefei Metalforming is 1.09 times more volatile than Lander Sports Development. It trades about 0.02 of its total potential returns per unit of risk. Lander Sports Development is currently generating about 0.03 per unit of volatility. If you would invest  295.00  in Lander Sports Development on October 4, 2024 and sell it today you would earn a total of  60.00  from holding Lander Sports Development or generate 20.34% return on investment over 90 days.

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

Hefei Metalforming Mach  vs.  Lander Sports Development

Hefei Metalforming Mach

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lander Sports Development

Risk-Adjusted Performance

7 of 100

Modest

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

Pair Trading with Hefei Metalforming and Lander Sports

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

The idea behind Hefei Metalforming Mach and Lander Sports Development 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.