Correlation Between Longxing Chemical and Sichuan Teway
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By analyzing existing cross correlation between Longxing Chemical Stock and Sichuan Teway Food, you can compare the effects of market volatilities on Longxing Chemical and Sichuan Teway 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 Sichuan Teway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longxing Chemical and Sichuan Teway.
Diversification Opportunities for Longxing Chemical and Sichuan Teway
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Longxing and Sichuan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Longxing Chemical Stock and Sichuan Teway Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Teway Food 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 Sichuan Teway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Teway Food has no effect on the direction of Longxing Chemical i.e., Longxing Chemical and Sichuan Teway go up and down completely randomly.
Pair Corralation between Longxing Chemical and Sichuan Teway
Assuming the 90 days trading horizon Longxing Chemical is expected to generate 1.39 times less return on investment than Sichuan Teway. But when comparing it to its historical volatility, Longxing Chemical Stock is 1.32 times less risky than Sichuan Teway. It trades about 0.22 of its potential returns per unit of risk. Sichuan Teway Food is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 921.00 in Sichuan Teway Food on September 2, 2024 and sell it today you would earn a total of 461.00 from holding Sichuan Teway Food or generate 50.05% 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. Sichuan Teway Food
Performance |
| Timeline |
| Longxing Chemical Stock |
| Sichuan Teway Food |
Longxing Chemical and Sichuan Teway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longxing Chemical and Sichuan Teway
The main advantage of trading using opposite Longxing Chemical and Sichuan Teway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longxing Chemical position performs unexpectedly, Sichuan Teway 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 Sichuan Teway will offset losses from the drop in Sichuan Teway's long position.| Longxing Chemical vs. Suzhou Xingye Material | Longxing Chemical vs. Guangzhou Tinci Materials | Longxing Chemical vs. Nuode Investment Co | Longxing Chemical vs. Henan Shuanghui Investment |
| Sichuan Teway vs. Longxing Chemical Stock | Sichuan Teway vs. Ningxia Younglight Chemicals | Sichuan Teway vs. Ningbo Jintian Copper | Sichuan Teway vs. Shenyang Huitian Thermal |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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