Correlation Between Zhongtong Guomai and Lutian Machinery
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By analyzing existing cross correlation between Zhongtong Guomai Communication and Lutian Machinery Co, you can compare the effects of market volatilities on Zhongtong Guomai 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 Zhongtong Guomai with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongtong Guomai and Lutian Machinery.
Diversification Opportunities for Zhongtong Guomai and Lutian Machinery
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zhongtong and Lutian is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Zhongtong Guomai Communication and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Zhongtong Guomai 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 Zhongtong Guomai Communication 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 Zhongtong Guomai i.e., Zhongtong Guomai and Lutian Machinery go up and down completely randomly.
Pair Corralation between Zhongtong Guomai and Lutian Machinery
Assuming the 90 days trading horizon Zhongtong Guomai Communication is expected to under-perform the Lutian Machinery. In addition to that, Zhongtong Guomai is 2.16 times more volatile than Lutian Machinery Co. It trades about -0.18 of its total potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.1 per unit of volatility. If you would invest 1,537 in Lutian Machinery Co on September 16, 2024 and sell it today you would earn a total of 50.00 from holding Lutian Machinery Co or generate 3.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Zhongtong Guomai Communication vs. Lutian Machinery Co
Performance |
Timeline |
Zhongtong Guomai Com |
Lutian Machinery |
Zhongtong Guomai and Lutian Machinery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zhongtong Guomai and Lutian Machinery
The main advantage of trading using opposite Zhongtong Guomai and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongtong Guomai 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.Zhongtong Guomai vs. China Petroleum Chemical | Zhongtong Guomai vs. PetroChina Co Ltd | Zhongtong Guomai vs. China State Construction | Zhongtong Guomai vs. China Railway Group |
Lutian Machinery vs. Nanjing Putian Telecommunications | Lutian Machinery vs. Air China Ltd | Lutian Machinery vs. Metro Investment Development | Lutian Machinery vs. Zhongtong Guomai Communication |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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