Correlation Between Guangzhou KingTeller and Lingyuan Iron
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By analyzing existing cross correlation between Guangzhou KingTeller Technology and Lingyuan Iron Steel, you can compare the effects of market volatilities on Guangzhou KingTeller and Lingyuan Iron 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 Guangzhou KingTeller with a short position of Lingyuan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou KingTeller and Lingyuan Iron.
Diversification Opportunities for Guangzhou KingTeller and Lingyuan Iron
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangzhou and Lingyuan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou KingTeller Technolog and Lingyuan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingyuan Iron Steel and Guangzhou KingTeller 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 Guangzhou KingTeller Technology are associated (or correlated) with Lingyuan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lingyuan Iron Steel has no effect on the direction of Guangzhou KingTeller i.e., Guangzhou KingTeller and Lingyuan Iron go up and down completely randomly.
Pair Corralation between Guangzhou KingTeller and Lingyuan Iron
Assuming the 90 days trading horizon Guangzhou KingTeller Technology is expected to generate 2.03 times more return on investment than Lingyuan Iron. However, Guangzhou KingTeller is 2.03 times more volatile than Lingyuan Iron Steel. It trades about 0.04 of its potential returns per unit of risk. Lingyuan Iron Steel is currently generating about -0.07 per unit of risk. If you would invest 450.00 in Guangzhou KingTeller Technology on November 1, 2024 and sell it today you would earn a total of 8.00 from holding Guangzhou KingTeller Technology or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou KingTeller Technolog vs. Lingyuan Iron Steel
Performance |
| Timeline |
| Guangzhou KingTeller |
| Lingyuan Iron Steel |
Guangzhou KingTeller and Lingyuan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou KingTeller and Lingyuan Iron
The main advantage of trading using opposite Guangzhou KingTeller and Lingyuan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou KingTeller position performs unexpectedly, Lingyuan Iron 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 Lingyuan Iron will offset losses from the drop in Lingyuan Iron's long position.The idea behind Guangzhou KingTeller Technology and Lingyuan Iron Steel 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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