Correlation Between Lianhe Chemical and Shandong Longquan
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By analyzing existing cross correlation between Lianhe Chemical Technology and Shandong Longquan Pipeline, you can compare the effects of market volatilities on Lianhe Chemical and Shandong Longquan 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 Shandong Longquan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lianhe Chemical and Shandong Longquan.
Diversification Opportunities for Lianhe Chemical and Shandong Longquan
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lianhe and Shandong is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lianhe Chemical Technology and Shandong Longquan Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Longquan 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 Shandong Longquan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Longquan has no effect on the direction of Lianhe Chemical i.e., Lianhe Chemical and Shandong Longquan go up and down completely randomly.
Pair Corralation between Lianhe Chemical and Shandong Longquan
Assuming the 90 days trading horizon Lianhe Chemical Technology is expected to under-perform the Shandong Longquan. In addition to that, Lianhe Chemical is 1.07 times more volatile than Shandong Longquan Pipeline. It trades about -0.01 of its total potential returns per unit of risk. Shandong Longquan Pipeline is currently generating about 0.05 per unit of volatility. If you would invest 460.00 in Shandong Longquan Pipeline on October 26, 2024 and sell it today you would earn a total of 27.00 from holding Shandong Longquan Pipeline or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lianhe Chemical Technology vs. Shandong Longquan Pipeline
Performance |
| Timeline |
| Lianhe Chemical Tech |
| Shandong Longquan |
Lianhe Chemical and Shandong Longquan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lianhe Chemical and Shandong Longquan
The main advantage of trading using opposite Lianhe Chemical and Shandong Longquan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lianhe Chemical position performs unexpectedly, Shandong Longquan 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 Shandong Longquan will offset losses from the drop in Shandong Longquan's long position.| Lianhe Chemical vs. Everdisplay Optronics Shanghai | Lianhe Chemical vs. XinJiang GuoTong Pipeline | Lianhe Chemical vs. China Sports Industry | Lianhe Chemical vs. Everjoy Health Group |
| Shandong Longquan vs. Zijin Mining Group | Shandong Longquan vs. Wanhua Chemical Group | Shandong Longquan vs. Baoshan Iron Steel | Shandong Longquan 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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