Correlation Between Shenzhen MYS and Lutian Machinery
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By analyzing existing cross correlation between Shenzhen MYS Environmental and Lutian Machinery Co, you can compare the effects of market volatilities on Shenzhen MYS and Lutian Machinery 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 Shenzhen MYS with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen MYS and Lutian Machinery.
Diversification Opportunities for Shenzhen MYS and Lutian Machinery
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Lutian is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen MYS Environmental and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Shenzhen MYS 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 Shenzhen MYS Environmental are associated (or correlated) with Lutian Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lutian Machinery has no effect on the direction of Shenzhen MYS i.e., Shenzhen MYS and Lutian Machinery go up and down completely randomly.
Pair Corralation between Shenzhen MYS and Lutian Machinery
Assuming the 90 days trading horizon Shenzhen MYS Environmental is expected to generate 1.62 times more return on investment than Lutian Machinery. However, Shenzhen MYS is 1.62 times more volatile than Lutian Machinery Co. It trades about 0.12 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.13 per unit of risk. If you would invest 246.00 in Shenzhen MYS Environmental on October 18, 2024 and sell it today you would earn a total of 85.00 from holding Shenzhen MYS Environmental or generate 34.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen MYS Environmental vs. Lutian Machinery Co
Performance |
| Timeline |
| Shenzhen MYS Environ |
| Lutian Machinery |
Shenzhen MYS and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen MYS and Lutian Machinery
The main advantage of trading using opposite Shenzhen MYS and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen MYS position performs unexpectedly, Lutian Machinery 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 Lutian Machinery will offset losses from the drop in Lutian Machinery's long position.| Shenzhen MYS vs. Ligao Foods CoLtd | Shenzhen MYS vs. Heilongjiang Transport Development | Shenzhen MYS vs. Hangzhou Arcvideo Technology | Shenzhen MYS vs. Beijing Sanyuan Foods |
| Lutian Machinery vs. City Development Environment | Lutian Machinery vs. Guangdong Liantai Environmental | Lutian Machinery vs. Shenzhen MYS Environmental | Lutian Machinery vs. Anyang Iron Steel |
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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