Correlation Between Lianhe Chemical and Xilong Chemical
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By analyzing existing cross correlation between Lianhe Chemical Technology and Xilong Chemical Co, you can compare the effects of market volatilities on Lianhe Chemical and Xilong Chemical 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 Lianhe Chemical with a short position of Xilong Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lianhe Chemical and Xilong Chemical.
Diversification Opportunities for Lianhe Chemical and Xilong Chemical
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lianhe and Xilong is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lianhe Chemical Technology and Xilong Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xilong Chemical and Lianhe Chemical 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 Lianhe Chemical Technology are associated (or correlated) with Xilong Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xilong Chemical has no effect on the direction of Lianhe Chemical i.e., Lianhe Chemical and Xilong Chemical go up and down completely randomly.
Pair Corralation between Lianhe Chemical and Xilong Chemical
Assuming the 90 days trading horizon Lianhe Chemical Technology is expected to under-perform the Xilong Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Lianhe Chemical Technology is 1.58 times less risky than Xilong Chemical. The stock trades about -0.08 of its potential returns per unit of risk. The Xilong Chemical Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 726.00 in Xilong Chemical Co on November 2, 2024 and sell it today you would earn a total of 55.00 from holding Xilong Chemical Co or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lianhe Chemical Technology vs. Xilong Chemical Co
Performance |
| Timeline |
| Lianhe Chemical Tech |
| Xilong Chemical |
Lianhe Chemical and Xilong Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lianhe Chemical and Xilong Chemical
The main advantage of trading using opposite Lianhe Chemical and Xilong Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lianhe Chemical position performs unexpectedly, Xilong Chemical 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 Xilong Chemical will offset losses from the drop in Xilong Chemical's long position.| Lianhe Chemical vs. Zijin Mining Group | Lianhe Chemical vs. Wanhua Chemical Group | Lianhe Chemical vs. Baoshan Iron Steel | Lianhe Chemical vs. Shandong Gold Mining |
| Xilong Chemical vs. Zijin Mining Group | Xilong Chemical vs. Wanhua Chemical Group | Xilong Chemical vs. Baoshan Iron Steel | Xilong Chemical vs. Shandong Gold Mining |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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