Correlation Between Aerospace and Lutian Machinery
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By analyzing existing cross correlation between Aerospace Hi Tech Holding and Lutian Machinery Co, you can compare the effects of market volatilities on Aerospace and Lutian Machinery 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 Aerospace with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerospace and Lutian Machinery.
Diversification Opportunities for Aerospace and Lutian Machinery
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aerospace and Lutian is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aerospace Hi Tech Holding and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Aerospace 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 Aerospace Hi Tech Holding are associated (or correlated) with Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of Aerospace i.e., Aerospace and Lutian Machinery go up and down completely randomly.
Pair Corralation between Aerospace and Lutian Machinery
Assuming the 90 days trading horizon Aerospace Hi Tech Holding is expected to under-perform the Lutian Machinery. In addition to that, Aerospace is 1.49 times more volatile than Lutian Machinery Co. It trades about -0.08 of its total potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.09 per unit of volatility. If you would invest 1,540 in Lutian Machinery Co on September 13, 2024 and sell it today you would earn a total of 50.00 from holding Lutian Machinery Co or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aerospace Hi Tech Holding vs. Lutian Machinery Co
Performance |
| Timeline |
| Aerospace Hi Tech |
| Lutian Machinery |
Aerospace and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerospace and Lutian Machinery
The main advantage of trading using opposite Aerospace and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerospace position performs unexpectedly, Lutian Machinery 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.| Aerospace vs. BeiGene | Aerospace vs. Kweichow Moutai Co | Aerospace vs. Beijing Roborock Technology | Aerospace vs. G bits Network Technology |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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