Correlation Between Lier Chemical and Guangzhou Tinci
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By analyzing existing cross correlation between Lier Chemical Co and Guangzhou Tinci Materials, you can compare the effects of market volatilities on Lier Chemical and Guangzhou Tinci 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 Lier Chemical with a short position of Guangzhou Tinci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lier Chemical and Guangzhou Tinci.
Diversification Opportunities for Lier Chemical and Guangzhou Tinci
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lier and Guangzhou is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lier Chemical Co and Guangzhou Tinci Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Tinci Materials and Lier 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 Lier Chemical Co are associated (or correlated) with Guangzhou Tinci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Tinci Materials has no effect on the direction of Lier Chemical i.e., Lier Chemical and Guangzhou Tinci go up and down completely randomly.
Pair Corralation between Lier Chemical and Guangzhou Tinci
Assuming the 90 days trading horizon Lier Chemical Co is expected to under-perform the Guangzhou Tinci. But the stock apears to be less risky and, when comparing its historical volatility, Lier Chemical Co is 1.64 times less risky than Guangzhou Tinci. The stock trades about -0.08 of its potential returns per unit of risk. The Guangzhou Tinci Materials is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 4,479 in Guangzhou Tinci Materials on November 1, 2024 and sell it today you would lose (2,651) from holding Guangzhou Tinci Materials or give up 59.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lier Chemical Co vs. Guangzhou Tinci Materials
Performance |
| Timeline |
| Lier Chemical |
| Guangzhou Tinci Materials |
Lier Chemical and Guangzhou Tinci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lier Chemical and Guangzhou Tinci
The main advantage of trading using opposite Lier Chemical and Guangzhou Tinci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lier Chemical position performs unexpectedly, Guangzhou Tinci 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 Guangzhou Tinci will offset losses from the drop in Guangzhou Tinci's long position.| Lier Chemical vs. Zijin Mining Group | Lier Chemical vs. Wanhua Chemical Group | Lier Chemical vs. Baoshan Iron Steel | Lier Chemical vs. Shandong Gold Mining |
| Guangzhou Tinci vs. Jinsanjiang Silicon Material | Guangzhou Tinci vs. Guocheng Mining Co | Guangzhou Tinci vs. Lier Chemical Co | Guangzhou Tinci vs. Jiangxi Naipu 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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