Correlation Between Lianhe Chemical and Gansu Jiu
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By analyzing existing cross correlation between Lianhe Chemical Technology and Gansu Jiu Steel, you can compare the effects of market volatilities on Lianhe Chemical and Gansu Jiu 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 Gansu Jiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lianhe Chemical and Gansu Jiu.
Diversification Opportunities for Lianhe Chemical and Gansu Jiu
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lianhe and Gansu is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lianhe Chemical Technology and Gansu Jiu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Jiu Steel 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 Gansu Jiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Jiu Steel has no effect on the direction of Lianhe Chemical i.e., Lianhe Chemical and Gansu Jiu go up and down completely randomly.
Pair Corralation between Lianhe Chemical and Gansu Jiu
Assuming the 90 days trading horizon Lianhe Chemical Technology is expected to generate 0.5 times more return on investment than Gansu Jiu. However, Lianhe Chemical Technology is 1.99 times less risky than Gansu Jiu. It trades about 0.1 of its potential returns per unit of risk. Gansu Jiu Steel is currently generating about -0.1 per unit of risk. If you would invest 576.00 in Lianhe Chemical Technology on August 31, 2024 and sell it today you would earn a total of 24.00 from holding Lianhe Chemical Technology or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lianhe Chemical Technology vs. Gansu Jiu Steel
Performance |
| Timeline |
| Lianhe Chemical Tech |
| Gansu Jiu Steel |
Lianhe Chemical and Gansu Jiu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lianhe Chemical and Gansu Jiu
The main advantage of trading using opposite Lianhe Chemical and Gansu Jiu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lianhe Chemical position performs unexpectedly, Gansu Jiu 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 Gansu Jiu will offset losses from the drop in Gansu Jiu's long position.| Lianhe Chemical vs. Zijin Mining Group | Lianhe Chemical vs. Baoshan Iron Steel | Lianhe Chemical vs. Rongsheng Petrochemical Co |
| Gansu Jiu vs. China Sports Industry | Gansu Jiu vs. Sichuan Fulin Transportation | Gansu Jiu vs. Guizhou Chanhen Chemical | Gansu Jiu vs. Lianhe Chemical Technology |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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