Correlation Between Long Giang and Development Investment

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

By analyzing existing cross correlation between Long Giang Investment and Development Investment Construction, you can compare the effects of market volatilities on Long Giang and Development Investment 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 Long Giang with a short position of Development Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Giang and Development Investment.

Diversification Opportunities for Long Giang and Development Investment

0.14

Correlation Coefficient

Long Giang  Development Investment

Average diversification

The 3 months correlation between Long and Development is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Long Giang Investment and Development Investment Constru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Development Investment and Long Giang 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 Long Giang Investment are associated (or correlated) with Development Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Development Investment has no effect on the direction of Long Giang i.e., Long Giang and Development Investment go up and down completely randomly.

Pair Corralation between Long Giang and Development Investment

Assuming the 90 days trading horizon Long Giang Investment is expected to generate 0.88 times more return on investment than Development Investment. However, Long Giang Investment is 1.14 times less risky than Development Investment. It trades about -0.01 of its potential returns per unit of risk. Development Investment Construction is currently generating about -0.02 per unit of risk. If you would invest  334,000  in Long Giang Investment on October 5, 2024 and sell it today you would lose (77,000) from holding Long Giang Investment or give up 23.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.17%
Values	Daily Returns

Long Giang Investment  vs.  Development Investment Constru

Long Giang Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Long Giang Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Long Giang is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Development Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Development Investment Construction are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Development Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Long Giang and Development Investment

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

The idea behind Long Giang Investment and Development Investment Construction 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.