Correlation Between Central China and Luzhou Lao
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By analyzing existing cross correlation between Central China Land and Luzhou Lao Jiao, you can compare the effects of market volatilities on Central China and Luzhou Lao 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 China with a short position of Luzhou Lao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central China and Luzhou Lao.
Diversification Opportunities for Central China and Luzhou Lao
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Luzhou is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Central China Land and Luzhou Lao Jiao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luzhou Lao Jiao and Central China 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 China Land are associated (or correlated) with Luzhou Lao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luzhou Lao Jiao has no effect on the direction of Central China i.e., Central China and Luzhou Lao go up and down completely randomly.
Pair Corralation between Central China and Luzhou Lao
Assuming the 90 days trading horizon Central China Land is expected to under-perform the Luzhou Lao. But the stock apears to be less risky and, when comparing its historical volatility, Central China Land is 1.08 times less risky than Luzhou Lao. The stock trades about -0.14 of its potential returns per unit of risk. The Luzhou Lao Jiao is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 14,264 in Luzhou Lao Jiao on August 29, 2024 and sell it today you would lose (577.00) from holding Luzhou Lao Jiao or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central China Land vs. Luzhou Lao Jiao
Performance |
| Timeline |
| Central China Land |
| Luzhou Lao Jiao |
Central China and Luzhou Lao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central China and Luzhou Lao
The main advantage of trading using opposite Central China and Luzhou Lao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central China position performs unexpectedly, Luzhou Lao 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 Luzhou Lao will offset losses from the drop in Luzhou Lao's long position.| Central China vs. Industrial and Commercial | Central China vs. Agricultural Bank of | Central China vs. China Construction Bank | Central China vs. Bank of China |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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