Correlation Between Shandong Mining and Lutian Machinery
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By analyzing existing cross correlation between Shandong Mining Machinery and Lutian Machinery Co, you can compare the effects of market volatilities on Shandong Mining 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 Shandong Mining with a short position of Lutian Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Mining and Lutian Machinery.
Diversification Opportunities for Shandong Mining and Lutian Machinery
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Lutian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Mining Machinery and Lutian Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lutian Machinery and Shandong Mining 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 Shandong Mining Machinery 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 Shandong Mining i.e., Shandong Mining and Lutian Machinery go up and down completely randomly.
Pair Corralation between Shandong Mining and Lutian Machinery
Assuming the 90 days trading horizon Shandong Mining Machinery is expected to generate 1.85 times more return on investment than Lutian Machinery. However, Shandong Mining is 1.85 times more volatile than Lutian Machinery Co. It trades about 0.17 of its potential returns per unit of risk. Lutian Machinery Co is currently generating about 0.07 per unit of risk. If you would invest 252.00 in Shandong Mining Machinery on September 13, 2024 and sell it today you would earn a total of 256.00 from holding Shandong Mining Machinery or generate 101.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Mining Machinery vs. Lutian Machinery Co
Performance |
| Timeline |
| Shandong Mining Machinery |
| Lutian Machinery |
Shandong Mining and Lutian Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Mining and Lutian Machinery
The main advantage of trading using opposite Shandong Mining and Lutian Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Mining 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.| Shandong Mining vs. China Petroleum Chemical | Shandong Mining vs. PetroChina Co Ltd | Shandong Mining vs. China State Construction | Shandong Mining vs. China Railway Group |
| Lutian Machinery vs. Industrial and Commercial | Lutian Machinery vs. Kweichow Moutai Co | Lutian Machinery vs. Agricultural Bank of | Lutian Machinery vs. China Mobile Limited |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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