Correlation Between Lianhe Chemical and ShuYu Civilian
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By analyzing existing cross correlation between Lianhe Chemical Technology and ShuYu Civilian Pharmacy, you can compare the effects of market volatilities on Lianhe Chemical and ShuYu Civilian 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 ShuYu Civilian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lianhe Chemical and ShuYu Civilian.
Diversification Opportunities for Lianhe Chemical and ShuYu Civilian
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lianhe and ShuYu is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lianhe Chemical Technology and ShuYu Civilian Pharmacy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShuYu Civilian Pharmacy 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 ShuYu Civilian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShuYu Civilian Pharmacy has no effect on the direction of Lianhe Chemical i.e., Lianhe Chemical and ShuYu Civilian go up and down completely randomly.
Pair Corralation between Lianhe Chemical and ShuYu Civilian
Assuming the 90 days trading horizon Lianhe Chemical Technology is expected to generate 1.64 times more return on investment than ShuYu Civilian. However, Lianhe Chemical is 1.64 times more volatile than ShuYu Civilian Pharmacy. It trades about 0.25 of its potential returns per unit of risk. ShuYu Civilian Pharmacy is currently generating about -0.07 per unit of risk. If you would invest 526.00 in Lianhe Chemical Technology on November 7, 2024 and sell it today you would earn a total of 69.00 from holding Lianhe Chemical Technology or generate 13.12% 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. ShuYu Civilian Pharmacy
Performance |
| Timeline |
| Lianhe Chemical Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ShuYu Civilian Pharmacy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lianhe Chemical and ShuYu Civilian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lianhe Chemical and ShuYu Civilian
The main advantage of trading using opposite Lianhe Chemical and ShuYu Civilian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lianhe Chemical position performs unexpectedly, ShuYu Civilian 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 ShuYu Civilian will offset losses from the drop in ShuYu Civilian's long position.The idea behind Lianhe Chemical Technology and ShuYu Civilian 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.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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