Correlation Between China Longyuan and Mengtian Home
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By analyzing existing cross correlation between China Longyuan Power and Mengtian Home Group, you can compare the effects of market volatilities on China Longyuan and Mengtian Home 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 China Longyuan with a short position of Mengtian Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Longyuan and Mengtian Home.
Diversification Opportunities for China Longyuan and Mengtian Home
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Mengtian is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding China Longyuan Power and Mengtian Home Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mengtian Home Group and China Longyuan 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 China Longyuan Power are associated (or correlated) with Mengtian Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mengtian Home Group has no effect on the direction of China Longyuan i.e., China Longyuan and Mengtian Home go up and down completely randomly.
Pair Corralation between China Longyuan and Mengtian Home
Assuming the 90 days trading horizon China Longyuan Power is expected to under-perform the Mengtian Home. But the stock apears to be less risky and, when comparing its historical volatility, China Longyuan Power is 1.12 times less risky than Mengtian Home. The stock trades about -0.22 of its potential returns per unit of risk. The Mengtian Home Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,054 in Mengtian Home Group on September 13, 2024 and sell it today you would earn a total of 63.00 from holding Mengtian Home Group or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Longyuan Power vs. Mengtian Home Group
Performance |
| Timeline |
| China Longyuan Power |
| Mengtian Home Group |
China Longyuan and Mengtian Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Longyuan and Mengtian Home
The main advantage of trading using opposite China Longyuan and Mengtian Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Longyuan position performs unexpectedly, Mengtian Home 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 Mengtian Home will offset losses from the drop in Mengtian Home's long position.| China Longyuan vs. Xinhua Winshare Publishing | China Longyuan vs. Will Semiconductor Co | China Longyuan vs. Jiangsu Phoenix Publishing | China Longyuan vs. Southchip Semiconductor Technology |
| Mengtian Home vs. Lutian Machinery Co | Mengtian Home vs. China Longyuan Power | Mengtian Home vs. PetroChina Co Ltd | Mengtian Home vs. Bank of China |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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