Correlation Between LianChuang Electronic and Yifeng Pharmacy
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By analyzing existing cross correlation between LianChuang Electronic Technology and Yifeng Pharmacy, you can compare the effects of market volatilities on LianChuang Electronic and Yifeng Pharmacy 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 Yifeng Pharmacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LianChuang Electronic and Yifeng Pharmacy.
Diversification Opportunities for LianChuang Electronic and Yifeng Pharmacy
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LianChuang and Yifeng is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding LianChuang Electronic Technolo and Yifeng Pharmacy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yifeng Pharmacy 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 Yifeng Pharmacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yifeng Pharmacy has no effect on the direction of LianChuang Electronic i.e., LianChuang Electronic and Yifeng Pharmacy go up and down completely randomly.
Pair Corralation between LianChuang Electronic and Yifeng Pharmacy
Assuming the 90 days trading horizon LianChuang Electronic Technology is expected to generate 1.39 times more return on investment than Yifeng Pharmacy. However, LianChuang Electronic is 1.39 times more volatile than Yifeng Pharmacy. It trades about 0.13 of its potential returns per unit of risk. Yifeng Pharmacy is currently generating about 0.06 per unit of risk. If you would invest 903.00 in LianChuang Electronic Technology on September 13, 2024 and sell it today you would earn a total of 189.00 from holding LianChuang Electronic Technology or generate 20.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LianChuang Electronic Technolo vs. Yifeng Pharmacy
Performance |
| Timeline |
| LianChuang Electronic |
| Yifeng Pharmacy |
LianChuang Electronic and Yifeng Pharmacy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LianChuang Electronic and Yifeng Pharmacy
The main advantage of trading using opposite LianChuang Electronic and Yifeng Pharmacy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LianChuang Electronic position performs unexpectedly, Yifeng Pharmacy 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 Yifeng Pharmacy will offset losses from the drop in Yifeng Pharmacy's long position.The idea behind LianChuang Electronic Technology and Yifeng Pharmacy 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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