Correlation Between Luzhou Lao and Shenzhen Transsion
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By analyzing existing cross correlation between Luzhou Lao Jiao and Shenzhen Transsion Holdings, you can compare the effects of market volatilities on Luzhou Lao and Shenzhen Transsion 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 Luzhou Lao with a short position of Shenzhen Transsion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luzhou Lao and Shenzhen Transsion.
Diversification Opportunities for Luzhou Lao and Shenzhen Transsion
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Luzhou and Shenzhen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Luzhou Lao Jiao and Shenzhen Transsion Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Transsion and Luzhou Lao 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 Luzhou Lao Jiao are associated (or correlated) with Shenzhen Transsion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Transsion has no effect on the direction of Luzhou Lao i.e., Luzhou Lao and Shenzhen Transsion go up and down completely randomly.
Pair Corralation between Luzhou Lao and Shenzhen Transsion
Assuming the 90 days trading horizon Luzhou Lao Jiao is expected to under-perform the Shenzhen Transsion. But the stock apears to be less risky and, when comparing its historical volatility, Luzhou Lao Jiao is 1.4 times less risky than Shenzhen Transsion. The stock trades about -0.04 of its potential returns per unit of risk. The Shenzhen Transsion Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 11,261 in Shenzhen Transsion Holdings on August 25, 2024 and sell it today you would lose (2,443) from holding Shenzhen Transsion Holdings or give up 21.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luzhou Lao Jiao vs. Shenzhen Transsion Holdings
Performance |
| Timeline |
| Luzhou Lao Jiao |
| Shenzhen Transsion |
Luzhou Lao and Shenzhen Transsion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luzhou Lao and Shenzhen Transsion
The main advantage of trading using opposite Luzhou Lao and Shenzhen Transsion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luzhou Lao position performs unexpectedly, Shenzhen Transsion 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 Shenzhen Transsion will offset losses from the drop in Shenzhen Transsion's long position.| Luzhou Lao vs. Shenzhen Clou Electronics | Luzhou Lao vs. Sichuan Fulin Transportation | Luzhou Lao vs. China Sports Industry | Luzhou Lao vs. Leaguer Shenzhen MicroElectronics |
| Shenzhen Transsion vs. Guangzhou Automobile Group | Shenzhen Transsion vs. Huasi Agricultural Development | Shenzhen Transsion vs. Sinomach General Machinery | Shenzhen Transsion 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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