Correlation Between ALERION CLEANPOWER and Longfor Group

Can any of the company-specific risk be diversified away by investing in both ALERION CLEANPOWER and Longfor Group 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 ALERION CLEANPOWER and Longfor Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALERION CLEANPOWER and Longfor Group Holdings, you can compare the effects of market volatilities on ALERION CLEANPOWER and Longfor Group 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 ALERION CLEANPOWER with a short position of Longfor Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALERION CLEANPOWER and Longfor Group.

Diversification Opportunities for ALERION CLEANPOWER and Longfor Group

-0.75

Correlation Coefficient

ALERION CLEANPOWER  Longfor Group

Pay attention - limited upside

The 3 months correlation between ALERION and Longfor is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and Longfor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Group Holdings and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with Longfor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Group Holdings has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and Longfor Group go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and Longfor Group

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the Longfor Group. In addition to that, ALERION CLEANPOWER is 1.06 times more volatile than Longfor Group Holdings. It trades about -0.04 of its total potential returns per unit of risk. Longfor Group Holdings is currently generating about 0.02 per unit of volatility. If you would invest  119.00  in Longfor Group Holdings on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Longfor Group Holdings or generate 0.84% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  Longfor Group Holdings

ALERION CLEANPOWER

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALERION CLEANPOWER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Longfor Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Longfor Group Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Longfor Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ALERION CLEANPOWER and Longfor Group

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

The idea behind ALERION CLEANPOWER and Longfor Group Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.