Correlation Between Longxing Chemical and Guangzhou Restaurants
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By analyzing existing cross correlation between Longxing Chemical Stock and Guangzhou Restaurants Group, you can compare the effects of market volatilities on Longxing Chemical and Guangzhou Restaurants 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 Longxing Chemical with a short position of Guangzhou Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longxing Chemical and Guangzhou Restaurants.
Diversification Opportunities for Longxing Chemical and Guangzhou Restaurants
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Longxing and Guangzhou is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Longxing Chemical Stock and Guangzhou Restaurants Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Restaurants and Longxing 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 Longxing Chemical Stock are associated (or correlated) with Guangzhou Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Restaurants has no effect on the direction of Longxing Chemical i.e., Longxing Chemical and Guangzhou Restaurants go up and down completely randomly.
Pair Corralation between Longxing Chemical and Guangzhou Restaurants
Assuming the 90 days trading horizon Longxing Chemical Stock is expected to generate 1.36 times more return on investment than Guangzhou Restaurants. However, Longxing Chemical is 1.36 times more volatile than Guangzhou Restaurants Group. It trades about 0.26 of its potential returns per unit of risk. Guangzhou Restaurants Group is currently generating about 0.09 per unit of risk. If you would invest 494.00 in Longxing Chemical Stock on September 1, 2024 and sell it today you would earn a total of 71.00 from holding Longxing Chemical Stock or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longxing Chemical Stock vs. Guangzhou Restaurants Group
Performance |
| Timeline |
| Longxing Chemical Stock |
| Guangzhou Restaurants |
Longxing Chemical and Guangzhou Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longxing Chemical and Guangzhou Restaurants
The main advantage of trading using opposite Longxing Chemical and Guangzhou Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longxing Chemical position performs unexpectedly, Guangzhou Restaurants 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 Restaurants will offset losses from the drop in Guangzhou Restaurants' long position.| Longxing Chemical vs. Dongfeng Automobile Co | Longxing Chemical vs. Sunwave Communications Co | Longxing Chemical vs. Shanghai Metersbonwe FashionAccessories | Longxing Chemical vs. Zotye Automobile Co |
| Guangzhou Restaurants vs. China State Construction | Guangzhou Restaurants vs. Poly Real Estate | Guangzhou Restaurants vs. China Vanke Co | Guangzhou Restaurants vs. China Merchants Shekou |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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