Correlation Between Central Plains and Lianhe Chemical
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By analyzing existing cross correlation between Central Plains Environment and Lianhe Chemical Technology, you can compare the effects of market volatilities on Central Plains and Lianhe Chemical 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 Central Plains with a short position of Lianhe Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Plains and Lianhe Chemical.
Diversification Opportunities for Central Plains and Lianhe Chemical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Lianhe is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Central Plains Environment and Lianhe Chemical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lianhe Chemical Tech and Central Plains 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 Central Plains Environment are associated (or correlated) with Lianhe Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lianhe Chemical Tech has no effect on the direction of Central Plains i.e., Central Plains and Lianhe Chemical go up and down completely randomly.
Pair Corralation between Central Plains and Lianhe Chemical
Assuming the 90 days trading horizon Central Plains is expected to generate 8.32 times less return on investment than Lianhe Chemical. But when comparing it to its historical volatility, Central Plains Environment is 2.6 times less risky than Lianhe Chemical. It trades about 0.05 of its potential returns per unit of risk. Lianhe Chemical Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 544.00 in Lianhe Chemical Technology on November 3, 2024 and sell it today you would earn a total of 51.00 from holding Lianhe Chemical Technology or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Plains Environment vs. Lianhe Chemical Technology
Performance |
| Timeline |
| Central Plains Envir |
| Lianhe Chemical Tech |
Central Plains and Lianhe Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Plains and Lianhe Chemical
The main advantage of trading using opposite Central Plains and Lianhe Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Plains position performs unexpectedly, Lianhe Chemical 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 Lianhe Chemical will offset losses from the drop in Lianhe Chemical's long position.| Central Plains vs. Shandong Homey Aquatic | Central Plains vs. Porton Fine Chemicals | Central Plains vs. Shenzhen Centralcon Investment | Central Plains vs. Nanxing Furniture Machinery |
| Lianhe Chemical vs. Ningbo Construction Co | Lianhe Chemical vs. Baoding Dongli Machinery | Lianhe Chemical vs. Anhui Transport Consulting | Lianhe Chemical vs. Lutian Machinery Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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