Correlation Between Zhengzhou Qianweiyangchu and Ligao Foods
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By analyzing existing cross correlation between Zhengzhou Qianweiyangchu Food and Ligao Foods CoLtd, you can compare the effects of market volatilities on Zhengzhou Qianweiyangchu and Ligao Foods 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 Zhengzhou Qianweiyangchu with a short position of Ligao Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhengzhou Qianweiyangchu and Ligao Foods.
Diversification Opportunities for Zhengzhou Qianweiyangchu and Ligao Foods
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zhengzhou and Ligao is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Zhengzhou Qianweiyangchu Food and Ligao Foods CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligao Foods CoLtd and Zhengzhou Qianweiyangchu 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 Zhengzhou Qianweiyangchu Food are associated (or correlated) with Ligao Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligao Foods CoLtd has no effect on the direction of Zhengzhou Qianweiyangchu i.e., Zhengzhou Qianweiyangchu and Ligao Foods go up and down completely randomly.
Pair Corralation between Zhengzhou Qianweiyangchu and Ligao Foods
Assuming the 90 days trading horizon Zhengzhou Qianweiyangchu Food is expected to under-perform the Ligao Foods. But the stock apears to be less risky and, when comparing its historical volatility, Zhengzhou Qianweiyangchu Food is 1.14 times less risky than Ligao Foods. The stock trades about -0.06 of its potential returns per unit of risk. The Ligao Foods CoLtd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 8,720 in Ligao Foods CoLtd on January 25, 2025 and sell it today you would lose (4,778) from holding Ligao Foods CoLtd or give up 54.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhengzhou Qianweiyangchu Food vs. Ligao Foods CoLtd
Performance |
| Timeline |
| Zhengzhou Qianweiyangchu |
| Ligao Foods CoLtd |
Zhengzhou Qianweiyangchu and Ligao Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhengzhou Qianweiyangchu and Ligao Foods
The main advantage of trading using opposite Zhengzhou Qianweiyangchu and Ligao Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhengzhou Qianweiyangchu position performs unexpectedly, Ligao Foods 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 Ligao Foods will offset losses from the drop in Ligao Foods' long position.The idea behind Zhengzhou Qianweiyangchu Food and Ligao Foods CoLtd 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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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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