Correlation Between Lianhe Chemical and Hainan Mining
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By analyzing existing cross correlation between Lianhe Chemical Technology and Hainan Mining Co, you can compare the effects of market volatilities on Lianhe Chemical and Hainan Mining 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 Hainan Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lianhe Chemical and Hainan Mining.
Diversification Opportunities for Lianhe Chemical and Hainan Mining
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lianhe and Hainan is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Lianhe Chemical Technology and Hainan Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Mining 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 Hainan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Mining has no effect on the direction of Lianhe Chemical i.e., Lianhe Chemical and Hainan Mining go up and down completely randomly.
Pair Corralation between Lianhe Chemical and Hainan Mining
Assuming the 90 days trading horizon Lianhe Chemical Technology is expected to generate 1.01 times more return on investment than Hainan Mining. However, Lianhe Chemical is 1.01 times more volatile than Hainan Mining Co. It trades about 0.04 of its potential returns per unit of risk. Hainan Mining Co is currently generating about 0.02 per unit of risk. If you would invest 561.00 in Lianhe Chemical Technology on September 1, 2024 and sell it today you would earn a total of 45.00 from holding Lianhe Chemical Technology or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lianhe Chemical Technology vs. Hainan Mining Co
Performance |
| Timeline |
| Lianhe Chemical Tech |
| Hainan Mining |
Lianhe Chemical and Hainan Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lianhe Chemical and Hainan Mining
The main advantage of trading using opposite Lianhe Chemical and Hainan Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lianhe Chemical position performs unexpectedly, Hainan Mining 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 Hainan Mining will offset losses from the drop in Hainan Mining's long position.The idea behind Lianhe Chemical Technology and Hainan Mining Co 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.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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