Correlation Between Longfor Group and SIDETRADE

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

By analyzing existing cross correlation between Longfor Group Holdings and SIDETRADE EO 1, you can compare the effects of market volatilities on Longfor Group and SIDETRADE 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 Longfor Group with a short position of SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longfor Group and SIDETRADE.

Diversification Opportunities for Longfor Group and SIDETRADE

0.5

Correlation Coefficient

Longfor Group  SIDETRADE

Very weak diversification

The 3 months correlation between Longfor and SIDETRADE is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Longfor Group Holdings and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 and Longfor Group 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 Longfor Group Holdings are associated (or correlated) with SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of Longfor Group i.e., Longfor Group and SIDETRADE go up and down completely randomly.

Pair Corralation between Longfor Group and SIDETRADE

Assuming the 90 days horizon Longfor Group is expected to generate 3.25 times less return on investment than SIDETRADE. In addition to that, Longfor Group is 1.19 times more volatile than SIDETRADE EO 1. It trades about 0.02 of its total potential returns per unit of risk. SIDETRADE EO 1 is currently generating about 0.07 per unit of volatility. If you would invest  22,000  in SIDETRADE EO 1 on December 30, 2024 and sell it today you would earn a total of  2,400  from holding SIDETRADE EO 1 or generate 10.91% return on investment over 90 days.

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

Longfor Group Holdings  vs.  SIDETRADE EO 1

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.

SIDETRADE EO 1

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SIDETRADE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Longfor Group and SIDETRADE

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

The idea behind Longfor Group Holdings and SIDETRADE EO 1 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.