Correlation Between LianChuang Electronic and Shenzhen Changfang
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By analyzing existing cross correlation between LianChuang Electronic Technology and Shenzhen Changfang Light, you can compare the effects of market volatilities on LianChuang Electronic and Shenzhen Changfang 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 LianChuang Electronic with a short position of Shenzhen Changfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of LianChuang Electronic and Shenzhen Changfang.
Diversification Opportunities for LianChuang Electronic and Shenzhen Changfang
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between LianChuang and Shenzhen is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding LianChuang Electronic Technolo and Shenzhen Changfang Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Changfang Light and LianChuang Electronic 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 LianChuang Electronic Technology are associated (or correlated) with Shenzhen Changfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Changfang Light has no effect on the direction of LianChuang Electronic i.e., LianChuang Electronic and Shenzhen Changfang go up and down completely randomly.
Pair Corralation between LianChuang Electronic and Shenzhen Changfang
Assuming the 90 days trading horizon LianChuang Electronic Technology is expected to generate 1.03 times more return on investment than Shenzhen Changfang. However, LianChuang Electronic is 1.03 times more volatile than Shenzhen Changfang Light. It trades about 0.08 of its potential returns per unit of risk. Shenzhen Changfang Light is currently generating about 0.08 per unit of risk. If you would invest 858.00 in LianChuang Electronic Technology on November 6, 2024 and sell it today you would earn a total of 26.00 from holding LianChuang Electronic Technology or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LianChuang Electronic Technolo vs. Shenzhen Changfang Light
Performance |
| Timeline |
| LianChuang Electronic |
| Shenzhen Changfang Light |
LianChuang Electronic and Shenzhen Changfang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LianChuang Electronic and Shenzhen Changfang
The main advantage of trading using opposite LianChuang Electronic and Shenzhen Changfang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LianChuang Electronic position performs unexpectedly, Shenzhen Changfang 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 Changfang will offset losses from the drop in Shenzhen Changfang's long position.The idea behind LianChuang Electronic Technology and Shenzhen Changfang Light 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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