Correlation Between Lianhe Chemical and China Sports
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By analyzing existing cross correlation between Lianhe Chemical Technology and China Sports Industry, you can compare the effects of market volatilities on Lianhe Chemical and China Sports 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 China Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lianhe Chemical and China Sports.
Diversification Opportunities for Lianhe Chemical and China Sports
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lianhe and China is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lianhe Chemical Technology and China Sports Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Sports Industry 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 China Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Sports Industry has no effect on the direction of Lianhe Chemical i.e., Lianhe Chemical and China Sports go up and down completely randomly.
Pair Corralation between Lianhe Chemical and China Sports
Assuming the 90 days trading horizon Lianhe Chemical Technology is expected to generate 1.82 times more return on investment than China Sports. However, Lianhe Chemical is 1.82 times more volatile than China Sports Industry. It trades about 0.31 of its potential returns per unit of risk. China Sports Industry is currently generating about 0.13 per unit of risk. If you would invest 535.00 in Lianhe Chemical Technology on November 8, 2024 and sell it today you would earn a total of 90.00 from holding Lianhe Chemical Technology or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lianhe Chemical Technology vs. China Sports Industry
Performance |
| Timeline |
| Lianhe Chemical Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| China Sports Industry |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lianhe Chemical and China Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lianhe Chemical and China Sports
The main advantage of trading using opposite Lianhe Chemical and China Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lianhe Chemical position performs unexpectedly, China Sports 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 China Sports will offset losses from the drop in China Sports' long position.The idea behind Lianhe Chemical Technology and China Sports Industry 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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